BOJ Policymaker Warns Rapid Rate Hikes Loom Amid Rising Price Pressures

Bank of Japan policymaker Kazuyuki Masu warned of price risks that may trigger rapid rate hikes, saying financial conditions in Japan remain accommodative. If inflation accelerates, there is a risk that the BOJ might inevitably need to rapidly raise interest rates.

Masu's comments come ahead of next week's policy meeting and add to a slew of hawkish BOJ commentary. Analysts polled by Reuters expect the BOJ to hike rates to 1.25 per cent next week and then to 1.75 per cent in the second quarter of 2027, earlier than previously thought.

Masu also said that the BOJ must pull real interest rates out of negative territory as soon as possible, signalling his concern over the demerits of too-low borrowing costs. He warned of broadening price pressures that have pushed underlying inflation 'very close' to its 2 per cent target.