Would raising the Bank of Japan's official discount rate really be the right medicine for the ailing economy?
This question is likely to be on the mind of anyone who has heard recent remarks by influential politicians on the need to raise the rate. Their argument is that a hike would expand individuals' income from savings interest and help stimulate private consumption.
But some speculate that these politicians are merely trying to bolster their prospects of being re-elected in this summer's House of Councilors election. At a recent executive meeting of the ruling Liberal Democratic Party, Taku Yamasaki, chairman of the Policy Research Council, said interest rates could be up for discussion as the party considers a new stimulus package. Some LDP figures had already called for an increase.
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