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Japan’s incoming prime minister, Shigeru Ishiba, emphasized the importance of maintaining accommodative monetary policy to support the country’s fragile economic recovery. Ishiba, who was previously critical of the Bank of Japan’s aggressive easing measures, stated that borrowing costs should remain low to bolster the economy. He highlighted the need for collaboration between the government and the Central bank to achieve price stability. Additionally, Ishiba outlined plans to implement fiscal measures to mitigate the impact of rising living expenses, particularly for low-income households.

Ishiba, a former defense minister, is scheduled to assume office on Tuesday following his victory in the ruling Liberal Democratic Party’s leadership election. While indicating a general preference for loose monetary policy, Ishiba hinted at a willingness to consider further interest rate adjustments. The Bank of Japan recently ended negative Interest rates and increased borrowing costs, aligning with its Inflation target. Ishiba has previously praised the Central bank‘s policy adjustments, noting their potential to enhance industrial competitiveness. However, he also expressed concerns about the ongoing challenge of deflation and weak consumer spending.

Following Ishiba’s election win, the yen, which initially weakened on the news of a dovish opponent in the LDP race, rebounded.

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