BOJ May Hike Rates Quickly if Japan's Inflation Accelerates

Japan's Bank of Japan (BOJ) may need to raise interest rates quickly if inflation accelerates, according to board member Kazuyuki Masu.

Masu warned that a recent increase in producer prices is a concern, as it could drive up consumer inflation more than in the past. Companies are actively transferring higher costs related to the Middle East conflict and the weak yen to consumers.

The producer price surge is partly due to rising fuel and chemical prices from the war in Iran, which will increase transportation costs combined with increasing food prices, having a lasting effect on overall prices.

Masu stated that underlying inflation has not yet reached the BOJ's 2% target but is close.