Hayashi's Economic Vision: Balancing Interest Rates and Yen Dynamics in Japan

Yoshimasa Hayashi, a top government spokesperson and candidate for Japan's next prime minister, has articulated his stance on economic policy in an interview with Reuters. He supports the Bank of Japan's plan to gradually raise interest rates, aligning with government efforts to manage Japan's export-driven economy and the weak yen's impact.

Hayashi highlighted a shift in Japan's traditional aversion to a strong yen, a sentiment diminished among exporters. Instead, the focus has turned to the currency's weakness and rising inflation, partly due to increased oil costs amid the Ukraine conflict. Hayashi affirmed the Bank of Japan Governor Kazuo Ueda's efforts to adjust interest rates to combat inflation exceeding the 2% target.

As the Liberal Democratic Party prepares for its leadership race, market attention has intensified, given the potential economic policies of the contenders. Hayashi promises targeted fiscal measures to address living costs and disaster relief without expanding deficit-covering debt. This contrasts with rival Sanae Takaichi's commitment to fiscal expansion to reflate the economy.

(With inputs from agencies.)