Takata (高田), a BOJ board member serving as an alternate for the governor, emphasized that consecutive rate hikes are possible. Markets are rapidly pricing in a rate hike at the 17-18 policy meeting, with attention focused on the direction of future discussions.
BOJ board member Takata (高田) expressed a hawkish view that consecutive rate hikes are possible and said interest rates should be adjusted with flexibility. In the swaps market, which reflects market expectations for interest rates, some believe that pricing for a rate hike at the next meeting has exceeded 100%.
Takata also referred to changes in the risk assessment resulting from heightened tensions in the Middle East, saying that downside scenarios for the economy had receded and concerns about deflation had diminished. He explained that 2026 would mark a new phase in which a shift in the overseas economy would prompt greater focus on inflation.
He said the current policy rate had reached neither the 2% level considered necessary to restrain an overheating economy nor the neutral rate. While acknowledging that the neutral rate is difficult to identify precisely, he said it was necessary to move closer to it in advance to prepare for secondary effects from inflation. He indicated that future responses should be considered flexibly.
BOJ Governor Ueda (植田), who is visiting the US, said that the timing and pace of rate hikes would be thoroughly discussed at each policy meeting, including the next one. Meanwhile, US Treasury Secretary Bessent repeatedly urged Japan to raise interest rates and pointed to a policy shift aimed at supporting economic growth rather than continuing monetary easing.
The report is based on Bloomberg interviews and presents the BOJ's monetary policy stance, market expectations and the views of US fiscal authorities.