No Hesitation on Faster Rate Hikes: BOJ Policymaker

Kobe, June 25 (Jiji Press)–Bank of Japan Policy Board member Naoki Tamura said Thursday he envisages lifting interest rates toward a neutral level around 2 pct and accelerating rate hikes without hesitation if upside risks to inflation intensify. At a meeting with local business leaders in the city of Kobe, Hyogo Prefecture, western Japan, Tamura said he thinks Japan’s neutral rate, which neither stimulates nor cools the economy, is “most likely around 2 pct,” adding that “what I envisage as a baseline path is raising the policy interest rate by 0.25 percentage points at intervals of a few months” toward that level. At its June 15-16 policy meeting, the BOJ decided by a 7-1 vote to lift the policy rate to around 1 pct from around 0.75 pct, the latest in a series of increases since the central bank ended its negative interest rate policy in March 2024. Tamura was among the seven Policy Board members to vote for the latest hike. “If the materialization of upside risks to prices becomes more likely, I consider it necessary to accelerate the pace of rate hikes without hesitation by increasing the frequency or size of rate hikes,” Tamura said, underscoring the BOJ’s resolve to contain inflation. On the Middle East situation, he said, “I expect upside risks when it comes to prices,” whatever course events may take. It is the BOJ’s mission “to serve as the ‘guardian of price stability,’ while maintaining thorough communication with the government,” Tamura added. END [Copyright The Jiji Press, Ltd.]