BoJ Himino Highlights Need for Timely Rate Hikes

Bank of Japan remains alert to upside inflation risks and will discuss the need to raise interest rates as markets increasingly expect another hike, Deputy Governor Ryozo Himino said in a speech Thursday. “It is important to stabilise underlying inflation at a level around 2%,” he said, warning that inflation above the 2% price stability target could hurt the economy and warrants greater attention than in the past. Himino added that the central bank will assess risks to its economic outlook, including the Middle East conflict, foreign-exchange movements and stronger AI-related demand. He also argued that “raising rates in a timely manner” could prevent inflation from accelerating and avoid the need for abrupt hikes later, ultimately benefiting smaller firms, mortgage borrowers and public finances. He stressed that the timing and pace of policy adjustment will depend on the likelihood of the baseline economic and price outlook being realised and the risks surrounding it.

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