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Japan’s Minister in charge of economic security, Sanae Takaichi, a key contender in the ruling party’s leadership race, emphasized the importance of maintaining ultra-low Interest rates to support the country’s delicate economic recovery. Takaichi criticized the Bank of Japan for its interest rate hikes this year, stating that it was premature and that low Interest rates should be sustained.

The remarks by Takaichi, who is gaining traction as a leading candidate for the Liberal Democratic Party (LDP) leadership, come amidst a debate among the nine candidates running in the race. The LDP is set to choose a new leader on September 27, with the winner expected to become the next prime minister of Japan.

Most of the LDP candidates have called for increased government spending to offset the impact of rising living costs, with Taro Kono, the minister in charge of digitalization, standing out by highlighting the need to address Japan’s fiscal health. Kono emphasized the importance of discussing ways to improve fiscal sustainability, especially as rising Interest rates could raise the cost of servicing Japan’s massive public debt.

Another candidate, Toshimitsu Motegi, suggested that the government could finance additional spending by utilizing the substantial reserves earmarked for currency intervention. While most of these reserves are currently invested in U.S. government bonds, Motegi proposed exploring alternative investment options to potentially enhance returns.

The discussions surrounding economic policies and monetary measures in Japan reflect the ongoing challenges facing the country’s economy and the need for strategic decisions to support growth and stability.

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