BOJ Deputy Governor Himino Ryozo (氷見野良三) pointed to the emergence of a risk that the underlying inflation rate could exceed 2% and said the BOJ should avoid abrupt monetary easing in the future through timely rate hikes. In remarks at a financial and economic meeting in Saitama Prefecture, he emphasized the importance of flexibility in monetary policy and sound judgment.
On the 27th, BOJ Deputy Governor Himino Ryozo (氷見野良三) said in a speech at the Saitama Prefecture Financial and Economic Meeting held in Saitama City that if the risk of the underlying inflation rate rising above 2% materializes, it could adversely affect the economy, adding that it is necessary to remain more alert than before to upside risks to prices.
He went on to emphasize the need to avoid sharp monetary tightening in the future through timely rate hikes, saying that the BOJ would engage in thorough discussions at each Monetary Policy Meeting. He indicated that stabilizing underlying inflation at around 2% is important and reiterated his view that financial conditions remain accommodative.
Regarding the timing and pace of rate hikes, he said the BOJ would consider them while assessing the likelihood of the economic and price outlook being realized and reviewing the risks, taking into account the situation in the Middle East, expanding demand related to AI and the impact of exchange-rate movements. He also referred to the possibility that yen depreciation could push up prices, pointing out that exchange-rate trends are an important factor in the conduct of monetary policy.
He also expressed the view that adjusting accommodative financial conditions through rate hikes would make it easier to allocate assets to growth-oriented investment. Although many in the market expect a rate hike at the September meeting, he also suggested that decisions will continue to depend on the latest data.