日銀福井総裁金利を上げるかもと示唆

BoJ governor flags rate rise

By Michiyo Nakamoto in Tokyo and Chris Giles in London

Published: May 10 2007 05:57 | Last updated: May 10 2007 18:37

Japan’s central bank governor on Thursday made the case for a gradual increase in interest rates, warning that keeping rates low could fuel the so-called yen carry trade and destabilise the country’s economy.

Japan’s interest rates, which at 0.5 per cent are the lowest among the Group of Seven nations, are relatively low in comparison with the economy, which has been growing at a little more than 2 per cent in recent years, Toshihiko Fukui, Bank of Japan governor, told parliament.


But Mr Fukui sought to counter a growing view that the BoJ may not be able to raise rates soon, which it fears could fuel a real estate bubble and more investors borrowing low-interest yen to invest in higher-yielding assets overseas, in what is known as the carry trade.

“If the expectation takes hold that low interest rates will continue regardless of the situation of both prices and the economy, then that could invite inefficient allocation of capital including real estate and the yen carry trade,” he told the Upper House’s financial committee.

“If the BoJ acts too slowly in adjusting interest rates, that would raise the possibility of [upside risks] occurring and would mean that we are not fulfilling our responsibility.”

Mr Fukui’s comments came as European central bankers made it clear that tighter monetary policy was necessary: Jean-Claude Trichet, European Central Bank president, on Thursday signalled that eurozone rates would rise to 4 per cent in June, while the Bank of England raised its main interest rate by a quarter of a percentage point to 5.5 per cent, its highest in six years.

With the Federal Reserve reiterating its main concern that “inflation will fail to moderate as expected” on Wednesday, all the world’s big central banks have signalled their primary focus remains the control of inflation.

Mr Fukui gave no indication of how soon the Bank of Japan might raise rates, saying only “we will cautiously and appropriately adjust interest rates, de-pending on economic development”. There is a broad consensus, however, that the BoJ will not be able to raise rates from 0.5 per cent until after the July Upper House elections.

Hiromichi Shirakawa, chief economist at Credit Suisse Securities in Tokyo, said there were fears that Japan’s low interest rates were fuelling massive investments overseas and “contributing to a global bubble”.

“The BoJ’s concern has to do with the global bubble, not domestic inflation,” he said.

The carry trade has also helped push the yen to a 21-year low against major currencies.

The Central Bank has made no secret of its desire to raise rates but has been stymied by weak price figures. Last month, the BoJ lowered its inflation forecast for this fiscal year to 0.1 per cent, from a 0.5 per cent previously, following consumer price declines in February and March.

Copyright The Financial Times Limited 2007