Former Japan FX Chief Urges BOJ to Hike Rates Every Meeting

A former top Japanese currency official is urging the Bank of Japan to raise its benchmark interest rate at every policy meeting, with a goal of pushing the rate above 2 percent. Takehiko Nakao, who served as vice-finance minister for international affairs until March 2013, made this call on a TV Tokyo program.

Nakao argued that Japan's real interest rates remain negative even after the central bank lifted its policy rate to 1 percent, while real rates are positive in every other major economy. With inflation running around 2 percent, he believes it would not be unusual for Japan's policy rate to reach 2.25 percent or even 2.5 percent.

The comments come as traders sharpen their focus on the timing and pace of the BOJ's next moves. Governor Kazuo Ueda held the policy rate at 1 percent in July but flagged upside risks to inflation, keeping the door open for action as early as September.