BOJ Deputy Governor Ryozo Himino (氷見野良三) indicated that, in considering the timing and pace of future rate hikes, the Bank would place greater weight on upside risks to prices and continue its deliberations at every Monetary Policy Meeting, including the September meeting.
Deputy Governor Himino (氷見野良三) said the key would be to consider the timing and pace of rate hikes while assessing the likelihood that the central outlook for the economy and prices would be realized. He said the Bank should conduct this review thoroughly at every meeting, including the next meeting in September.
In his speech, he stressed the importance of stabilizing inflation at around 2%, in view of the possibility that the underlying inflation rate could exceed 2%, and said that upside risks to prices needed to be given greater consideration than before.
Although the speech contained no clear indication of a rate hike at the September meeting or an acceleration in the pace of hikes, it has been interpreted as supporting expectations of an early rate hike because of the Bank’s heightened awareness of inflation risks. There is also a view that the BOJ is watching market developments against the backdrop of moves to correct yen weakness and other factors.
The yen traded in the low ¥159 range on the afternoon of the 27th, while the dollar-buying trend eased somewhat against the backdrop of US inflation data and interest-rate movements. After Deputy Governor Himino’s speech began, the yen’s decline showed signs of narrowing.