BOJ Deputy Governor Calls for Timely Rate Hikes Amid Inflation Risks

Bank of Japan Deputy Governor Ryozo Himino emphasized the need for timely interest rate hikes to address mounting inflation risks, echoing market expectations for a near-term increase in borrowing costs.

In a speech to business leaders, Himino stressed that adjusting still-loose financial conditions would help distribute assets more efficiently to investment with growth potential. He argued that raising rates would prevent a spike in inflation and abrupt rate hikes in the future.

Himino also cautioned that a weak yen could push up inflation at a faster pace than in the past, and that the BOJ will consider this factor when guiding policy. The deputy governor's speech has been closely watched by markets for clues on the pace and timing of future rate hikes.

Some analysts have expressed concerns that further hiking rates could hurt a fragile economy, but Himino countered this view, saying that timely interest rate hikes would be in the best interest of smaller firms. The BOJ is set to raise its key interest rate as soon as September, with sources indicating it may hike more aggressively thereafter.