BOJ Deputy Governor Warns of Inflation Risks and Timely Rate Hikes

Bank of Japan (BOJ) Deputy Governor Ryozo Himino emphasized the need for timely interest rate hikes, particularly in addressing inflation risks. In a speech, he highlighted the rising pressures on prices due to global events such as the Middle East war and robust demand for artificial intelligence.

Himino noted that Japan is entering a phase where the BOJ must consider the possibility of underlying inflation exceeding its 2% target. He stated that if inflation deviates above this level, it would have an adverse impact on the economy, making it necessary to pay greater attention to upside risks to prices.

While Himino did not explicitly confirm a September rate hike, he expressed his concerns about keeping financial conditions accommodative, suggesting that a timely adjustment through rate hikes is essential. He also argued that raising rates would help stabilize price growth around the 2% target and ultimately benefit smaller firms.