Kentaro Sugyama, Daniel Leussink

TOKYO, Reuters – Japan’s new governor of the Bank of Japan must have the ability to steer it away from its current ultra-easy monetary policies, Kenta Ichizumi of Japan’s largest opposition party said Thursday.

President of left-leaning Constitutional Democratic Party of Japan, Izumi (CDPJ), said that the recent declines in the yen could have a negative impact on the economy and increase import costs.

Izumi stated to Reuters that “we’re starting to see bad inflation”, fueled by a weak yen as well rising raw material costs.

He said that “the impact is beginning to be really large”, adding that the rising costs of import goods are affecting people’s lives and business activity.

Izumi claimed that high fuel costs and rising food prices were causing households to take a major hit. His party has asked its policy research committee for help in formulating measures to combat the rising price.

The comments highlight the profound shift in Japanese politics’ perception of the advantages and disadvantages associated with a weak yen.

CDPJ is made up of key members of the old Democratic Party of Japan. This party, which took office in 2009 and repeatedly pressured Japan’s Bank of Japan to loosen monetary policy, so as to stop a strong Japanese yen from threatening the country’s export-dependent economy.

Izumi indicated that it is possible for the BOJ to maintain monetary policy as they have stated that it will not withdraw stimulus until the 2% target of inflation is met in a stable fashion.

He said that the central bank might need to reconsider its monetary policy in case inflation rises.

A shift in BOJ policies could be linked to Haruhiko Kuroda’s successor, who will finish her second five-year term in March 2023.

Kuroda made a bold move to bring Japan back from deflation in 2013, launching a large asset-buying campaign. He has always advocated for keeping monetary policy loose to meet his lofty 2% target.

The BOJ is facing growing criticism for the increasing cost of extended easing. This includes the impact on bank profits that result from years of low interest rates.

Many lawmakers blame the BOJ for its easy policies that weaken the yen while increasing import prices.

Izumi declared that “the government should pick someone who can clearly see how the BOJ might normalize its monetary policies.”