BOJ Urged to Hike Interest Rates Above 2%
Takehiko Nakao, Japan's former Vice Minister of Finance for International Affairs, has called on the Bank of Japan (BOJ) to raise interest rates above 2%. Speaking to TV Tokyo, Nakao stated that despite the BOJ raising its policy rate to 1%, real interest rates in Japan remain negative.
Nakao believes that bringing the policy rate to 2.25%, 2.5% would be a reasonable step under current economic conditions. This increase would help reduce pressure on the yen and narrow the interest rate differential with the US.
Market participants are pricing in a 79% chance of a rate hike at the BOJ's September 18 meeting, with some analysts suggesting that the central bank could follow up with another hike in December.
Japan's 10-year government bond yield has risen to 2.91%, hitting its highest level in nearly three decades.