BOJ Policy Board Member Takata Hajime (高田創) suggested that the economy had entered a new phase in which interest rates should be raised flexibly, citing rising upside risks to prices as demand related to AI expands. In light of developments at overseas central banks, Takata Hajime (高田創) said Japan may accelerate its shift toward higher interest rates.
In a speech at the Financial and Economic Forum in Sapporo, BOJ Policy Board Member Takata Hajime (高田創) said that monetary policy had entered “a new phase in which interest rates should be raised flexibly, without being constrained by a set pace,” and warned that upside risks to prices were increasing.
Takata Hajime (高田創) said that action to prevent prices from rising further was important against a backdrop including expanding demand related to AI, and also pointed out that the downside scenario stemming from the impact of the situation in the Middle East had receded.
Referring to developments at overseas central banks, Takata Hajime (高田創) described the ECB’s start of rate hikes and the Federal Reserve’s shift in its outlook toward rate hikes as a “starting gun,” saying that Japan needed to rethink its approach on the premise that it should restore alignment with overseas central banks.
Regarding future rate hikes, Takata Hajime (高田創) proposed a flexible response without being constrained by the intervals or increments of rate hikes anticipated by the market, and said that the BOJ’s 2% price stability target had been broadly achieved.