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BOJ · Inflation · Interest Rates · Yen
Bank of Japan Deputy Governor Ryozo Himino warned that delaying interest rate hikes poses a greater danger to the economy than raising them, advocating for timely adjustments to achieve and maintain inflation targets.
The Bank of Japan recently raised borrowing costs to a 31-year high of 1%, and markets anticipate at least one more hike this year. Himino emphasized that failing to act promptly necessitates more aggressive tightening later, which inflicts greater economic damage on households and businesses through channels like surging mortgage rates.
While current inflation is primarily driven by rising energy prices and a weak yen, Himino stated the BOJ will intervene if this cost-push inflation threatens broader price increases. Government data showed May consumer inflation, excluding fresh food, at 1.4%, below the BOJ's 2% target, though corporate prices are rising faster than expected.
Surging oil costs are projected to impact retail prices more clearly around summer. Himino also noted the yen's persistent weakness, with the dollar trading at 161.12 yen, past the 160 danger zone.
Finance Minister Satsuki Katayama issued verbal warnings about potential intervention against speculative movements.
