Former Bank of Japan policymaker Sakurai Makoto (桜井真) said the BOJ could raise its policy rate by 0.25% every 3 months, bringing it to 2% next June.
Former Bank of Japan policymaker Sakurai Makoto (桜井真) said in an interview with Reuters that the BOJ is expected to continue raising its policy rate by 0.25% approximately every 3 months, reaching 2% next June. At its September monetary policy meeting, the BOJ raised the rate to 1.25% while indicating that higher oil prices were increasing upward pressure on inflation.
Sakurai Makoto (桜井真) said the latest decision marked a major turning point in the conduct of monetary policy. He said the BOJ's priority on addressing inflation had become clear, and assessed that the hike would be the shortest-interval additional rate increase since the end of the Bank's unconventional monetary easing in March 2024, taking place just 3 months later.
Sakurai Makoto (桜井真) said that higher crude oil import prices, amid heightened tensions in the Middle East, could push up inflation from the end of the year onward, even though the nationwide consumer price index rose just 1.9% year on year in August. The BOJ is also expected to raise its inflation outlook in the Outlook Report to be released in October.
Concerns about rising long-term interest rates are also growing, with the yield on newly issued 10-year Japanese government bonds at times approaching the 3% range. Some expect downward pressure on the yen to persist because of the impact of fiscal management, and the market is focused on how much the BOJ will be able to raise rates after they reach 2%.