Bank of Japan Hawk Masu Urges Early End to Negative Real Interest Rates

Bank of Japan Board Member Masu has urged an early end to negative real interest rates, signaling his support for continued rate hikes.

In a speech and press conference on September 10, Masu emphasized that controlling prices through monetary policy and maintaining positive real wage growth is essential. He noted that the current financial environment is 'accommodative' and can be adjusted by raising the policy rate.

Masu expressed his view that firmly bringing the policy rate into the estimated neutral rate range would establish a framework enabling agile policy measures, which he believes requires further rate hikes. However, he also suggested that there may be room to decouple asset size reduction from policy rate increases.

Regarding price trends, Masu pointed out that underlying inflation is approaching 2% and warned that rising labor and logistics costs are exerting a structural influence on prices. He expressed concern about the potential for fuel and chemical price increases driven by tensions in the Iran situation to push up prices in a more persistent manner.