An IMF official said the Bank of Japan could accelerate the pace of rate hikes if inflation rises more than expected. Ahead of the monetary policy meeting at the end of this month, the direction of BOJ monetary policy is a key focus for the market.
Krishna Srinivasan (クリシュナ・スリニバサン), Director of the IMF’s Asia and Pacific Department, said the BOJ’s efforts to lower its policy rate toward a level neutral for the economy were “appropriate at this point,” adding that if inflation rises more than expected, the BOJ may be forced to tighten policy more quickly in order to prioritize controlling inflation expectations. These remarks were made ahead of an important BOJ policy meeting.
The market is increasingly expecting the BOJ to deliver an additional rate hike this year, and expectations for a hike in December are growing. The recent depreciation of the yen and rising raw-material costs are seen as contributing to inflationary pressure, while some reports say the BOJ raised its policy rate in June and then to 1.25% in September.