The BOJ is carefully assessing the impact of rate hikes as long-term interest rates rise. The market view is spreading that the target for rate hikes is higher than previously expected.
As long-term interest rates rise, the BOJ is carefully assessing the impact of faster rate hikes on the economy and prices. Some within the BOJ argue that long-term interest rates will stabilize if upside risks to prices are contained, while others say the endpoint for rate hikes is higher than before.
With long-term interest rates rising amid a combination of factors, including higher crude oil prices and fiscal concerns, the question is whether the BOJ can maintain market confidence that it can contain inflation through appropriate rate hikes.