BOJ Policymaker Flags Faster Rate Hikes as Inflation Nears Target

Bank of Japan policymaker Kazuyuki Masu has signaled that interest rates may need to rise faster than expected if inflation picks up. Inflation is getting close to 2%, and Masu believes it's time for the BOJ to pull real interest rates out of negative territory 'as soon as possible.'

Masu argued that unusually cheap borrowing can distort spending and pricing, pointing to firmer producer prices due to higher energy and materials costs. A weak yen makes imports pricier, amplifying this problem.

The shift in tone from debate about sustaining 2% inflation to the possibility of overshooting it justifies quicker 'normalization' from the BOJ, according to Masu. Investors are now repriceing the expected path for Japanese rates, with the yen often reacting first.