BoJ's Himino Warns of Inflation Risks, Advocates Timely Rate Hikes

Bank of Japan Deputy Governor Ryozo Himino emphasized the need for timely interest rate hikes to stabilize underlying inflation at around 2%. Speaking on Thursday, Himino warned that inflation above this target could harm the economy and warrant greater attention. He noted that the central bank will assess risks to its economic outlook, including the Middle East conflict, foreign-exchange movements, and stronger AI-related demand.

Himino argued that raising rates in a timely manner could prevent inflation from accelerating and avoid abrupt hikes later on, ultimately benefiting smaller firms, mortgage borrowers, and public finances. The timing and pace of policy adjustment will depend on the likelihood of the baseline economic and price outlook being realized and the risks surrounding it.