Bank of Japan Policy Board member Masu Kazuyuki (増一行) indicated in a speech in Fukui that the Bank would continue raising its policy rate. He explained that the underlying inflation rate was approaching 2%, and cited the situation in Iran and AI demand as factors behind price pressures, stressing the importance of keeping them in check.
Bank of Japan Policy Board member Masu Kazuyuki (増一行) indicated in a speech in Fukui that the Bank would continue raising its policy rate and adjust the degree of monetary easing, according to reports. He explained that the underlying inflation rate, excluding short-term factors, was approaching 2%.
The situation in Iran was cited as a factor behind inflationary pressure, and the view was expressed that if inflation accelerates, there is a risk that accommodative monetary policy would need to be shifted quickly. He also said that it was important to “keep inflation from rising significantly above 2%.”
AI demand driving up semiconductor prices was also cited as a factor behind price increases, and the remarks were conveyed as indicating that attention is focusing on future price trends. They were interpreted as reflecting progress toward moving away from the Bank of Japan’s accommodative stance.
Overall, the remarks indicated a recognition that, as a global shift toward higher interest rates spreads, Japan’s accommodative stance carries the risk of forcing the country to raise rates rapidly if inflation accelerates.