Japan Official Wants Rate Cut

Minister for International Trade and Industry Eiichi Nakao on Tuesday added a powerful voice to the chorus demanding a cut in Japan’s key discount rate by calling it an option in efforts to trim the nation’s trade surplus.

“Japan needs to take flexible financial action such as a discount rate cut to expand domestic demand to trim the trade surplus as well as make efforts to expand imports,” Nakao told a news conference.

Nakao said his ministry had made efforts to increase imports, such as urging Japanese companies to import more finished products.

Japan’s customs-cleared trade surplus widened to an unadjusted $9.76 billion in September from $6.89 billion a year earlier, the Finance Ministry said Monday.

In adjusted terms, it widened to $7.67 billion from a revised $7.23 billion a month earlier.

It was Japan’s biggest ever monthly surplus and confirmed that the trend toward a shrinking surplus had been reversed.

The Bank of Japan last cut its discount rate, the rate it charges for loans to other banks, to 5.5% from 6% July 1.

As Japan’s economic growth slows, there have been widespread expectations that the central bank would cut the rate again as a stimulant.

Latest available figures show that gross national product, the total value of goods and services and the broadest indicator of economic growth, slowed dramatically to an annualized 2% growth rate in the April to June quarter, after adjustment for inflation.

This compared to a revised 11% rise in the January-to-March quarter.