BoJ Eyes Further Rate Hikes Amid Persistent Cost Pressures

Bank of Japan (BoJ) policy rate hikes may continue as underlying inflation nears 2%, according to Kazuyuki Masu, a BoJ board member. Speaking in Fukui on Thursday, Masu emphasized that the pace of hikes will be determined by progress toward the July baseline scenario and risks from crude oil, AI-driven demand, and foreign exchange (FX) moves.

Masu warned that higher fuel and chemical costs tied to the Iran situation could prove more than temporary, lifting distribution and other expenses. Additionally, food prices face pressure from rising domestic logistics, shipping fees, and imported fertilizer, raising concern over persistent inflation.

Recent rate hikes have not curbed firms' funding demand, which has instead grown, though risks of overheating in corporate investment remain. Households overall hold net asset surpluses, but younger borrowers face heavier housing-loan burdens despite stronger wage growth.