Speaking in Fukui, Bank of Japan policy board member Masu Ikko (増一行) indicated that the central bank intends to continue raising its policy rate. He explained that underlying inflation is approaching 2% and warned that inflationary pressures could intensify.
Speaking in Fukui, Bank of Japan policy board member Masu Ikko (増一行) indicated that the central bank would continue raising its policy rate and adjust the degree of monetary easing. He explained that underlying inflation is now quite close to 2%.
He said there were concerns that inflationary pressures could intensify amid developments in Iran, and that it was important to keep inflation from significantly exceeding 2%. He stressed the significance of raising interest rates.
Masu Ikko (増一行) pointed out that “the whole world is in rate-hiking mode in response to developments in Iran,” and said that Japan, where monetary policy remains accommodative, faces the risk of being forced into rapid rate hikes if inflation accelerates. He also cited AI demand pushing up prices of semiconductors and other products as a factor behind inflation.
The Bank of Japan decided at its June meeting to raise the policy rate to around 1.0%. It is expected to leave rates unchanged at its July meeting and plans to raise them to around 1.25% at the next monetary policy meeting (17, 18), drawing attention to whether the pace of rate hikes will accelerate.