BOJ's Himino Signals Timely Rate Hikes Amid Inflation Risks

Bank of Japan Deputy Governor Ryozo Himino emphasized the need for timely interest rate hikes to address mounting inflation risks. In a speech to business leaders, Himino highlighted the economy's sensitivity to exchange-rate moves and warned that a weak yen could push up inflation faster than in the past.

The BOJ must balance stabilizing price growth around its 2% target with the risk of a spike in inflation and abrupt rate hikes. Himino argued that adjusting still-loose financial conditions would help distribute assets more efficiently to investment with growth potential.

Markets have nearly fully priced in a September rate hike, with sources telling Reuters that the BOJ is set to raise the rate as soon as September and consider hiking more aggressively thereafter. Himino's speech has been closely watched for clues on the pace and timing of future rate hikes.