BOJ deputy chief calls for more rate hikes on inflation risks

Saipan, Japan -- Bank of Japan Deputy Governor Ryozo Himino advocated for additional interest rate increases to address potential inflation risks on Thursday, ahead of the central bank's upcoming policy meeting. Himino emphasized that greater attention should be given to the upside risk to prices compared to previous years. The deputy governor cited several factors contributing to the rising inflation, such as the surge in crude oil prices due to the Middle East conflict, semiconductor prices driven by heightened global demand for AI-related technologies, and the recent depreciation of the yen.

Furthermore, Himino pointed out that these inflationary pressures are expected to intensify. This sentiment gained momentum following Bank of Japan Governor Kazuo Ueda's comments at a press conference in July, where he suggested accelerating the rate hike process if necessary. Ueda's remarks indicated that the central bank might consider raising rates more frequently than the current schedule of every six months, potentially resulting in a September increase following the June hike.

Additionally, the joint yen-buying intervention by Japan and the United States on July 31, aimed at stabilizing the weakening yen, further fueled expectations of a September rate hike. Some analysts believe that a combination of a Bank of Japan rate increase and a delay in the U.S. Federal Reserve's rate hike could narrow the interest rate differential, potentially strengthening the yen.