TOKYO (Reuters) -The Bank of Japan should be cautious about raising interest rates further as Japan’s gradual return to an inflationary mindset could be disrupted by any premature tightening, said Etsuro Honda, a close economic adviser to Sanae Takaichi, who is likely to become the country’s next prime minister.
“Japan is at a delicate stage right now, where the long-standing deflationary mindset is gradually giving way to a more positive inflationary outlook,” Etsuro Honda, who advises Takaichi on economic policy, told Reuters in an interview.
Pointing to a recent surge in Japanese stock markets driven by optimism over Takaichi’s reflationary policies, Honda said: “I genuinely hope they don’t raise rates now.”
“Of course, it’s entirely up to the BOJ,” he added.
(Reporting by Makiko Yamazaki and Yoshifumi Takemoto; Editing by Hugh Lawson)
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