BOJ policymaker sees case for early rate hike if economy stays firm
Kazuyuki Masu says the Bank of Japan should move quickly on rates if data show no clear downturn, citing the need to keep inflation below 2%.
- Bank of Japan board member Kazuyuki Masu stated the central bank should raise its policy interest rate at the earliest possible opportunity.
- This potential rate hike is conditional on economic indicators not showing any clear signs of a slowdown.
- Masu stressed that a timely rate increase is necessary to prevent the underlying inflation rate from exceeding the BOJ's 2% target.
- He believes Japan has clearly entered an "inflationary phase," and further rate hikes are needed to complete the normalization of monetary policy.
Bank of Japan Policy Board member Kazuyuki Masu said on Thursday (May 14) that the central bank should lift its policy interest rate at the earliest possible opportunity, provided that economic indicators do not point to a slowdown.
Speaking in the southwestern city of Kagoshima, Masu said, “If statistical data do not indicate clear signs of an economic downturn, I believe it is desirable to raise the policy rate at the earliest stage possible.”
He stressed that future policy action must be aimed at preventing inflation from moving beyond the BOJ’s target. “What is vital from now on is to ensure that, through timely and appropriate policy rate hikes, the underlying inflation rate does not exceed 2 pct,” Masu said.
Masu also pointed to the danger that inflation could gain pace if oil prices remain elevated because of tensions in the Middle East.
At the BOJ’s policy-setting meeting last month, the board voted six to three to keep the policy rate unchanged. Masu supported the decision, while three other members dissented and called for a rate increase.
Explaining why he backed the April decision, Masu said, “The situation did not warrant a hasty policy rate hike.”
Even so, he said Japan’s economic conditions had shifted. “As the behavior that took root during the period of deflation is now being unentrenched, Japan has clearly entered an inflationary phase.”
“To complete the normalization of monetary policy in Japan, I am convinced that the bank needs to raise the policy interest rate further,” he added.
[Copyright The Jiji Press, Ltd.]
