BOJ Deputy Calls for Further Rate Hikes Amid Inflation Risks

BOJ Deputy Governor Ryozo Himino has called for further rate hikes to combat inflation risks, citing the weaker yen's impact on prices. Himino emphasized that the central bank should pay greater attention to the upside risk to prices than in the past, due to higher crude oil prices and rising semiconductor costs.

The BOJ raised its key policy rate to a 31-year high of 1.0 percent in June and left it steady at its previous meeting in July. Financial markets expect a rate hike at the next policy meeting on September 17-18, with some anticipating a joint yen-buying intervention by the Japanese and U.S. authorities.

Himino stressed that while monetary policy does not target exchange rates, the yen's depreciation has an impact on economic activity and prices. He noted that the 'pass-through from exchange rates to prices seems to be getting stronger,' which can influence underlying inflation through changes in inflation expectations.