BOJ Deputy Governor Warns of Inflation Overshoot Risk

Bank of Japan Deputy Governor Ryozo Himino has emphasized the need for timely interest rate increases to prevent inflation from overshooting the BOJ's 2% target. Speaking in Saitama on August 27, Himino called for 'robust discussions at each policy meeting' on the appropriate pace of tightening.

The comments came as Japan's core Consumer Price Index for July climbed 1.8% year-over-year, the fastest pace since January. The yen remains weak, making imports more expensive, and energy prices have been rising due to geopolitical instability in the Middle East.

Himino did not explicitly endorse a September hike, but his emphasis on overshoot risk marks a significant shift for a central bank that spent two decades trying to generate inflation. If the BOJ delivers another rate increase at its September 17-18 policy meeting, it would mark yet another step in Japan's slow-motion exit from ultra-loose monetary policy.