BOJ policymaker warns of rapid rate hikes if inflation accelerates
Kazuyuki Masu warned that financial conditions may force the Bank of Japan to raise interest rates quickly, citing rising fuel and food costs linked to geopolitical conflicts. Inflation is currently very close to the 2 per cent target.
Board member Kazuyuki Masu stated that the Bank of Japan might be compelled to increase interest rates rapidly if inflation speeds up. He emphasized that current financial conditions remain too loose. Masu highlighted a spike in producer prices as a critical concern, noting it could drive consumer inflation higher than historical patterns. He identified rising fuel and chemical costs from the Iran war and expenses from currency weakness as key drivers passing through to consumers via food prices. Masu warned these factors could create lasting effects on overall price levels. He argued real interest rates must exit negative territory immediately. While offering no specific timeline, he insisted underlying inflation should stay near but not exceed 2 per cent. If this threshold is breached, the central bank would need swift, aggressive adjustment of its policy rate.
