Japanese Economics Minister Kaoru Yosano reiterated on Sunday that it was up to the Bank of Japan (BOJ) to decide whether to end its policy of keeping short-term interest rates near zero at its July 13-14 meeting.
The BOJ will likely end an era of zero interest rates and raise the key overnight call rate to 0.25 percent from zero on Friday unless new risk factors emerge, such as a plunge in Tokyo share prices, sources told Reuters last week.
That would be the first rate increase in six years in Japan.
Yosano, who has been more supportive to an eventual end to BOJ's zero rate policy than other cabinet members, also said the furore over BOJ Governor Toshihiko Fukui's personal investments should not affect the central bank's monetary policy decisions.
Speaking on a nation-wide TV programme, Yosano said the BOJ's zero-rate policy was an "abnormal" monetary policy that needed to be corrected eventually when warranted by economic conditions.
"We need to eventually end this policy. I think that would mean the normalisation of our economy," Yosano told the public broadcaster NHK.
"But that is a decision for the BOJ, which should make judgements based on their knowledge and experiences while taking responsibility for the decision."
A growing number of market participants expect a rate hike, with a Reuters poll last week showing that 32 of 41 analysts and traders expect a July rate increase.
Representatives of the Ministry of Finance and Yosano's Cabinet Office sit in on BOJ policy-setting meetings. They cannot vote on policy but they can ask the board to delay decisions.
Yosano said the government would have a list of questions for the BOJ to make sure a policy shift would be appropriate.
"I would like the BOJ to make a decision after fully analysing the situation by going through the checklist," he said.
Recent comments, including those from Yosano, suggesting that the government would want to respect the BOJ's decision have prompted views that it would probably not ask the BOJ to delay a decision to end zero interest rates.
Yosano said it would be inappropriate to link the row over Fukui's personal investments to monetary policy.
The central bank governor has been under fire over a 10 million yen ($87,680) investment he made in 1999 in a fund run by Yoshiaki Murakami, who has been indicted for insider trading.
Fukui made his original investment while employed in the private sector and the BOJ said he did not violate any BOJ rules.
But his judgement has been questioned because he kept the money in the fund after becoming the central bank chief in 2003.
"It is wrong to mix the governor's personal issues with Japan's monetary policy. Monetary policy exists for lives of Japanese people and the economy. I know people point to the governor's issues, but I would like the BOJ as a whole to make a right (monetary policy) decision," Yosano said.
Yosano dismissed the idea that market jitters over missile launches by North Korea last week would affect the BOJ's policy decisions, repeating the government's position that the missile launches would have no impact on the Japanese economy.