The U.S. Federal Reserve’s decision to terminate its zero interest rate policy will have a positive impact on the Japanese economy, Cabinet ministers said Thursday.
In Asia, Japan may have the most to gain from the first U.S. interest rate hike since June 2006 because higher rates are likely to strengthen the dollar against the yen, facilitating Japanese exports.
Asian stocks rose Thursday and some currencies weakened moderately against the dollar. Investors welcomed the Fed’s signal that interest rate hikes will be gradual. Japan’s Nikkei average gained 303.65 points to close at 19,353.56.
Asked about Wednesday’s U.S. interest rate increase, economy minister Akira Amari told reporters that financial markets “are reacting positively to a path Washington has started taking toward normalization of (its) monetary environment.”
A firmer U.S. economy “will be a plus for the Japanese economy in the medium-to-long term,” Amari said.
Speaking separately, Chief Cabinet Secretary Yoshihide Suga said the U.S. rate hike appears to reflect a steady recovery in the world’s largest economy.
“The U.S. economic recovery poses a positive impact on the Japanese economy,” Suga told a news conference.
“We believe (U.S. policymakers) will continue to employ appropriate measures regarding U.S. economic developments,” the top government spokesman said. He said Tokyo would continue to monitor Washington’s monetary policy closely.
Finance Minister Taro Aso told reporters the rate hike was “appropriate” amid growing signs of a brisk U.S. economic situation.
The Bank of Japan began a two-day monetary policy meeting Thursday amid expectations for continued monetary easing. Market expectations are that inflation will fall.
BOJ Gov. Haruhiko Kuroda has said the central bank’s 2 percent inflation target is achievable, but recent BOJ data show lower oil prices have made Japanese companies cautious about the outlook. They expect consumer prices to rise 1.0 percent next year, down from 1.2 percent projected earlier.
The BOJ is likely to keep its basic assessment of the economy that it is recovering moderately.
The economy avoided a technical recession in the July to September quarter with an annualized real 1.0 percent increase in gross domestic product. Still, many economists expect growth for the current quarter to be modest amid concerns about a China-led slowdown that threatens Japanese exports.