BOJ's Takata Seeks Flexible Rate Hikes Amid Rising Inflation Risks

Bank of Japan policy board member Hajime Takata is calling for flexibility in interest rate hikes, cautioning against locking into a schedule. The BOJ lifted its policy rate to around 1% in June and may increase it further to 1.25% at the July meeting.

Takata emphasized that the next steps should be data-driven, rather than adhering to market expectations or a pre-set calendar. He noted that Japan is moving into a new phase of tightening after years of ultra-low rates and argued that inflation and growth performance should guide future decisions.

The BOJ is close to its 2% inflation goal, but Takata stressed the need for balance between domestic financial conditions and external risks, including government bond yields and the yen's movements. He also highlighted upside inflation risks due to higher energy and shipping costs linked to Middle East tensions and stronger global demand tied to AI investment.