BOJ's Tamura says expects a gradual path for interest rate hikes

Bank of Japan Board Member Naoki Tamura delivers a speech.

• Japan’s neutral interest rate is likely to be around 1% at least.
• The road to ending the easing policy is still very long
• We will carefully consider the pros and cons of getting out of the easy policy.

• Short-term interest rates need to rise to at least around 1% by the second half of our long-term forecast period through FY26, to achieve the 2% inflation target on a sustained basis.

• Short-term interest rates should be raised in stages, with scrutiny of how the economy and inflation respond to such steps.
• We will closely monitor the movements of the financial markets and their impact on the economy, and prices should raise interest rates in a timely manner and in stages.
• The pace at which markets expect the Bank of Japan to raise interest rates is too slow, and raising interest rates at this pace could increase the risk of rising inflation.

• We expect consumption to rise moderately as sharp declines in the yen are reversed unilaterally.

• The chances of Japan sustainably achieving the Bank of Japan’s interest rate target are increasing.
• I personally see the risk of upward inflation increasing.

USD/JPY Drops on Tamura Comments

This article was written by Eamonn Sheridan on www.forexlive.com.