On Tuesday, Economy Minister Shigeyuki Goto said liquidity and interest rate concerns created U.S. and European banking sector troubles, which won’t affect Japan’s economy and financial system.
After U.S. regulators seized First Republic Bank (FRC.N) and sold its assets to JPMorgan Chase & Co. (JPM.N), Goto spoke to Reuters.
“The West faced liquidity and interest rate risks. Goto said financial institutions and government must take liquidity issues seriously.
“The U.S. financial sector is fine.”
Goto said he anticipated the Bank of Japan to guide policy flexibly and responsibly, without elaborating if the U.S. financial troubles delayed normalizing its easing policy.
He noted that risk considerations include negative revisions to world growth predictions and financial market swings as Western countries tighten monetary policy.
The BOJ should handle monetary policy activities, but I don’t see the present financial scenario affecting Japan’s economy and financial sector.
The BOJ should direct monetary policy flexibly, considering the economy and financial markets.
On Friday, the BOJ held ultra-low interest rates but announced a strategy to evaluate its past monetary policy measures, laying the stage for incoming Governor Kazuo Ueda to wind off his predecessor’s enormous stimulus package gradually.
Japan will quadruple military and childcare expenditures over the next three years to confront China and North Korea and boost birth rates.
The government is trying to find permanent money for the expenditure increase, which would strain the industrial world’s highest debt, which exceeds 250% of Japan’s yearly economic output.
Given the shaky Japanese economy, Goto said sales tax income would be difficult to use to support more daycare expenditures.
Goto said the government will keep to its goal of balancing the country’s main budget, excluding new bond sales and debt payment costs, by March 2026, a “not easy” target.
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