CGTN Europe interviewed Dr Seijiro Takeshita, Professor, School of Management and Information, University of Shizuoka
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00:00Now, Dr. Seijio Takeshita is a professor at the University of Shizuoka's School of Management and Information.
00:06He gave us his thoughts about how the rate hike would impact the Japanese economy.
00:12Well, I would say this is more like normalization of the rates. People talk about rate rise,
00:17but this is really a normalization. And from that context, yes, we are getting back to
00:21normalized state. But that said, of course, there's quite a lot of external ambiguity factors,
00:27particularly from the United States, the new president. So this is something that we all
00:32have to watch very carefully. And of course, BOJ itself is also watching very carefully,
00:36because that basically could evoke so many of the unexpected type of volatility.
00:45Deflation, a major ongoing issue for Japan. Can Japan see the back of it now?
00:50Well, yes, we've already achieved what the BOJ saw as a goal of 2% on CPI. And
00:59we are expected to see continuous rise in the wage side and inflation, because in our case,
01:06it's cost push inflation. It's not as serious as demand pull inflation that you see in the United
01:10States or United Kingdom. So people do feel that it's fairly under control. I have a bit of doubts
01:17about that. But, you know, that's one of the reasons why BOJ have decided to normalize the
01:23rates. And from that perspective, yes, we are coming back on the normal track.
01:29And with this rate decision, what does it mean for ordinary businesses,
01:33ordinary consumers in Japan? Well, actually, it's, I would say,
01:39a pretty negative news from MNEs. Well, BOJ say more like mid-sized, small-sized Japanese
01:47companies. And the reason for this is that they're very much relying on indirect financing,
01:52in other words, financing from the banks. And these medium and small-sized enterprises,
01:58for that reason, will have more burden on the interest side. And also, they're much
02:03reliant on the borrowing. So, you know, from that perspective, it would be negative for these
02:10companies. But again, this is normalization. You know, one would expect that, well, you know,
02:17it would basically decrease the, I would say, the rates between the United States and Japan,
02:26therefore, inducing, you know, stronger yen. Thus, we'll be able to avoid, you know, further
02:33pressure from inflation, which I think is a very optimistic scenario. And my reason for this is
02:40because I don't think the interest rate gap will be lessened as many people expect, particularly
02:46as we are facing upper house election in Japan in the summertime. And also, due to the fact that
02:55there's a spying, a lot of mid-sized and small enterprises politically would not like the rate
03:02price. And how do you think this move aligns Japan's central bank now with other major central
03:07banks? I don't think the Bank of Japan has the same maneuverability or capability as the Fed
03:13or the European Central Bank. They don't have the deep pocket as many people think.
03:19Considering the fact that the current, you know, account has reached well over 600 trillion yen,
03:24raising interest rate itself is shooting in our own foot. And basically, from many of the
03:30political and economic reasons, it's very difficult for them to really maneuver, you know, their
03:38policies.