Bank of Japan official warns interest rates may need to rise faster
Bank of Japan Policy Board member Kazuyuki Masu points to inflation nearing the 2% target, negative real rates and the growing price impact of a weaker yen.
- Bank of Japan (BOJ) Policy Board member Kazuyuki Masu warned that a rapid interest rate hike may become unavoidable if inflation strengthens.
- Masu stated that underlying inflation is "very close" to the central bank's 2% target, justifying the need for further rate increases to normalize monetary policy.
- He also cited the growing impact of the yen's depreciation on prices and the need to address negative real interest rates as factors requiring close attention.
With the Bank of Japan (BOJ) due to hold its next monetary policy meeting on September 17 and 18, Policy Board member Kazuyuki Masu has set out the case for further interest rate rises, warning that a faster move may become unavoidable if inflation strengthens.
In a speech in Fukui, central Japan, on Thursday (September 10), Masu pointed to financial conditions that remain accommodative.
If price pressures intensify, he warned, the BOJ could be forced to “implement a rapid policy interest rate hike”.
Underlying inflation, a measure that strips out temporary influences, has not yet reached 2%, according to Masu, although it is “very close” to the central bank’s target.
He maintained that additional increases were necessary to “complete the normalization of monetary policy”.
Masu also called for swift action on negative inflation-adjusted real interest rates, stating that the situation “should be addressed as soon as possible”.
Turning to the yen, he noted that the effect of its depreciation on prices “has become more pronounced than in the past and warrants close attention”.
[Copyright The Jiji Press, Ltd.]
