BOJ Policymaker Warns of Rapid Rate Hikes Amid Broadening Price Pressures

Bank of Japan (BOJ) policymaker Kazuyuki Masu has warned that rapid interest rate hikes may be necessary if inflation accelerates in Japan. In a speech ahead of next week's policy meeting, Masu highlighted the country's loose financial conditions and expressed concern over broadening price pressures.

The BOJ raised interest rates to 1 per cent in June, but Masu emphasized that real interest rates must be pulled out of negative territory as soon as possible. He noted that a recent spike in producer prices warrants attention, as it could push up consumer inflation more than in the past.

With financial conditions remaining accommodative, Masu said there is a risk that the BOJ might inevitably need to rapidly raise interest rates if inflation accelerates. He also emphasized the importance of ensuring underlying inflation does not significantly exceed 2 per cent.