(Bloomberg) -- The Bank of Japan should more clearly show its intention to normalize monetary policy, according to ruling party heavyweight Toshimitsu Motegi in remarks a week before the central bank meets to decide whether to raise interest rates.
“The BOJ needs to clearly communicate that it will firmly proceed with the normalization of monetary policy,” Liberal Democratic Party Secretary-General Motegi said in Tokyo on Monday.
The remarks suggest growing political frustration over the central bank’s cautious stance as its extremely low rates keep downward pressure on the yen while inflation continues to outpace the BOJ’s target and wage growth.
Higher import prices fueled by weakness in the currency are contributing to the cost-of-living crunch that is among the factors behind the low approval ratings for Prime Minister Fumio Kishida. The premier faces a party leadership election in September.
Motegi didn’t go far as indicating the BOJ should raise rates at its meeting ending on July 31. But the former foreign minister’s comments are receiving close market attention as they help to mark his position on monetary policy ahead of the LDP leadership race.
Motegi, who has been considered as a possible candidate for premier, hasn’t said whether he would run in the election, which will ultimately determine who is prime minister.
The BOJ is increasingly facing calls from politicians to do more. Digital Transformation Minister Kono Taro, who is another possible contender in the LDP leadership election, flagged the need for the BOJ to raise rates last week given weakness in the yen.
The BOJ raised interest rates for the first time in 17 years in March and scrapped its massive monetary easing program. The decision on whether to raise rates again at next week’s meeting has been complicated by recent weakness in consumer spending, according to people familiar with the matter.
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