BOJ Deputy Calls for Timely Rate Hikes Amid Inflation Fears

Bank of Japan Deputy Governor Ryozo Himino called for timely interest rate hikes to address inflation risks, echoing market expectations of a near-term increase in borrowing costs. In a speech delivered before a news briefing on August 27, Himino highlighted mounting inflationary pressures caused by rising fuel costs from the Middle East conflict and robust global AI demand.

Himino emphasized that Japan has entered a phase where the BOJ must bear in mind the possibility of underlying inflation exceeding its 2% target. He stated that if underlying inflation deviates above this target, it would have an adverse impact on the economy and urged the BOJ to pay greater attention to upside risks to prices.

Mori, senior economist at SBI Shinsei Bank, noted that Himino's speech has been closely watched by markets for clues on the pace and timing of future rate hikes. He added that the September meeting is likely to be a live one as sources have told Reuters that the BOJ is set to raise the rate as soon as September.