BOJ May Hike Rates Faster Amid Inflation Risks

Bank of Japan (BOJ) board member Kazuyuki Masu has hinted that interest rates may need to be raised more rapidly if inflation accelerates in Japan. This comes as the country's underlying inflation rate is nearing the central bank's 2% target.

Masu warned that broadening price pressures have pushed inflation very close to the central bank's target, and that the BOJ should move real interest rates out of negative territory as soon as possible.

The BOJ has raised its policy rate to 1% in June, but markets expect another increase next week. A recent surge in producer prices warrants close attention, according to Masu, who noted that companies appear more willing to pass higher costs on to consumers.

Masu did not provide specific guidance on the timing or pace of future rate increases, but said the BOJ would need to assess whether the economy is moving in line with its baseline outlook while also monitoring risks from oil prices and movements in the yen.