BOJ Deputy Governor Sees Timely Rate Hikes Needed Amid Inflation Risks

Bank of Japan Deputy Governor Ryozo Himino emphasized the need for timely interest rate hikes to address mounting inflation risks. In a speech on Thursday, Himino stressed that underlying inflation approaching 2% requires attention from the BOJ.

Himino noted that elevated fuel costs and rising chip prices due to global AI demand are pushing up inflation. He also mentioned that a weak yen could accelerate inflation at a faster pace than in the past.

Despite refraining from giving explicit signals on the timing of the next rate hike, Himino hinted that 'in-depth deliberations' should be held at each policy meeting to address price pressures.

Markets have nearly fully priced in the chance of a September rate hike, with sources suggesting the BOJ is set to raise rates as soon as this month and consider more aggressive hikes thereafter.

Himino countered views that hiking rates could hurt a fragile economy by arguing that adjusting still-loose financial conditions would help distribute assets more efficiently to investment with growth potential.