BOJ's Himino Warns of Abrupt Inflation Risks with Loose Financial Conditions

Bank of Japan Deputy Governor Ryozo Himino emphasized the importance of timely interest rate increases to prevent abrupt rises in inflation. Speaking on Thursday, Himino noted that if underlying inflation exceeds the 2% target, it could harm the economy and necessitate higher rates later.

Himino called for in-depth deliberations at each monetary policy meeting with consideration for upside price risks. He stated that adjusting loose financial conditions through rate hikes would help allocate assets more efficiently to investments with growth potential.

The BOJ must focus on stabilizing price growth around the 2% level, Himino said. A weak yen could accelerate inflation more quickly than before, and exchange-rate movements are among the key factors the central bank will monitor when guiding policy.