BOJ Policymaker Warns Rapid Rate Hikes May Be Needed Amid Accelerating Inflation

Bank of Japan (BOJ) policymaker Kazuyuki Masu has warned that the central bank may need to raise interest rates rapidly if inflation accelerates. In a speech ahead of next week's policy meeting, Masu stated that broadening price pressures have pushed underlying inflation 'very close' to its 2% target.

Masu also emphasized the importance of pulling real interest rates out of negative territory as soon as possible, signaling his concern over the demerits of too-low borrowing costs. However, he noted that recent data does not show signs of a big, rapid overshoot in inflation, suggesting little need for a bigger-than-expected 50-basis-point rate hike next week.

Masu's remarks add to a slew of hawkish BOJ commentary and pressure from U.S. Treasury Secretary Scott Bessent that have cemented views the BOJ will raise interest rates this month. Analysts polled by Reuters expect the BOJ to hike rates to 1.25% next week and then to 1.75% in the second quarter of 2027, amid persistent concerns over broadening price pressures and yen weakness.