BOJ Policymaker Backs Early Rate Hike Unless Economy Weakens

Tokyo, May 14 (Jiji Press)–Bank of Japan policymaker Kazuyuki Masu said Thursday that the central bank should raise its policy interest rate as soon as possible unless the economy shows signs of slowing down. “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,” Masu said during a speech in the southwestern city of Kagoshima. “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,” said the BOJ Policy Board member. He warned of the risk of inflation accelerating due to high oil prices amid tensions in the Middle East. At its previous policy-setting meeting last month, the BOJ board decided by a vote of six to three to hold the policy rate steady. While Masu voted in favor of the decision, the three dissenting members proposed a rate hike. Explaining his vote at the April meeting, Masu said, “The situation did not warrant a hasty policy rate hike.” Nevertheless, Masu noted, “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. END [Copyright The Jiji Press, Ltd.]