Bank of Japan Policy Board member Masu (増) said in a speech in Fukui that, while expressing concern that high prices could push up inflation as a persistent trend rather than a temporary shock, the central bank would maintain its stance on raising interest rates. Markets have priced in a rate hike ahead of the next monetary policy meeting, with the pace to be judged each time.
Bank of Japan Policy Board member Masu (増) expressed concern in a speech in Fukui that high prices resulting from the worsening situation in the Middle East could "push up inflation as a persistent trend."
At a press conference after the speech, Masu said that the pace of rate hikes would be "considered each time" and that the most important thing was to contain the underlying inflation rate so that it does not rise significantly above 2%.
The Bank of Japan is preparing for next week's monetary policy meeting, and markets have priced in a rate hike with a probability of more than 90%. The policy rate was raised to around 1.0% at the June meeting, and a rate hike in September could accelerate the pace.
There is an understanding that the current policy rate remains below the range of the neutral rate estimated by the Bank of Japan, around 1.1% to 2.5%. Masu expressed the view that it was important to maintain the ability to signal rate hikes and cuts flexibly without reaching the neutral rate.