Japan’s central bank governor yesterday 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."
与此同时，欧洲央行官员也明确表示，有必要紧缩货币政策：欧洲央行(ECB)行长让-克洛德o特里谢(Jean-Claude Trichet)昨日暗示，欧元区利率将在6月份升至4%的水平;而英国央行(Bank of England)也于昨日决定将主导利率提高25个基点，至5.5%，为6年来最高水平。
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, yesterday 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.