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Bank of Japan`s Fukui Intends to Continue Raising Interest Rates

Toshihiko Fukui, governor of the Bank of Japan, Said Monday that he intends to slowly raise interest rates in order to not hurt growth. Fukui refused to say when Japan`s national bank intends to raise interest rates. In a speech Fukui gave in to a group of businessmen in Osaka, Western Japan, Fukui said: `The current economic recovery has shown a record long expansion (post war), so I think the idea of further expansion lacks a sense of reality,` He added. `Companies cannot be too optimistic when they think they have to keep competing in an open, global market.`

Fukui said that in the Bank of Japan will monitor `asset prices and the forex change market,` as well as, general economic and inflation developments. Fukui continued to say that Japan`s corporate capital spending is `robust but not overheating`. On the other hand, customer spending is weak but improving. Fukui concluded that `none of those strong and weak data have not changed the economic mechanism`, meaning that the growth will remain in the current rate.

Fukui also explained risks the Japanese economy faces in the coming months. Stating a downturn in the US economy as the main risk to the Japanese economy as the US is Japan`s largest market. Fukui says he doesn`t expect the US will enter a depression although the Bank of Japan will monitor the situation in the US continually. He added that the risk of growing inflation in the US still exists and will also be monitored.