Shigeru Ishiba's Economic Vision: Japan's New Prime Minister Targets Inflation and Wage Growth

Shigeru Ishiba, Japan's new prime minister, plans to maintain loose monetary policies but won't oppose gradual interest rate hikes. Ishiba's economic focus includes boosting household income, tackling inflation, and moving away from 'Abenomics'. Analysts see his win as easing the Bank of Japan's efforts to normalize monetary policy.

Shigeru Ishiba, Japan's incoming prime minister, indicated on Friday that the nation's monetary policy would broadly stay accommodative, while signaling openness to further gradual interest rate increases. "We'll deploy fiscal stimulus if necessary. There also won't be any change to Japan's loose monetary-policy trend," Ishiba said on a television program.

"It's something the Bank of Japan, which is obliged to achieve price stability, must decide," Ishiba remarked when questioned about the potential for further rate hikes by the central bank. Ishiba noted he would refrain from making specific requests to the BOJ, allowing the bank freedom to phase out stimulus cautiously.

Ishiba's comments came after his victory in the ruling party's leadership race, poised to make him the next prime minister due to the party's parliamentary majority. Following the BOJ's cessation of negative interest rates in March, short-term borrowing costs were raised to 0.25%, marking a significant shift from a decade-long period of aggressive stimulus measures.

(With inputs from agencies.)