BOJ's Himino Calls for Timely Rate Hikes to Curb Inflation Risk

Bank of Japan Deputy Governor Ryozo Himino has made his most direct case yet for near-term rate hikes, saying that raising rates in a timely manner would help avoid a future spike in inflation.

In a speech to business leaders on Thursday, Himino emphasized the importance of addressing upside price risks and explicitly flagged yen weakness as an accelerant to inflation, adding that FX moves are among the key inputs guiding policy.

The BOJ's focus should be on stabilizing price growth around its 2% target, Himino said, rather than continuing to nurture it higher. He also linked the case for tightening to capital allocation, arguing that adjusting still-loose financial conditions through rate hikes would help distribute assets more efficiently toward investment with genuine growth potential.

With underlying inflation nearing 2%, Himino's comments add to a week of central bank signalling already dominated by hawkish commentary out of Australia and the Bank of Korea's back-to-back hike. The remarks will keep September's meeting firmly in focus for currency and rates markets, as the BOJ weighs the timing of its move.