BOJ deputy chief calls for timely rate hike, focus on inflation risk

On August 27, Bank of Japan Deputy Governor Ryozo Himino emphasized the necessity for prompt interest rate increases, emphasizing the risk of inflation rising beyond its target of 2 percent. Himino stressed the importance of balancing the need for comprehensive information with timely action to prevent falling behind on inflation concerns.

During a news conference, Himino stated that the Bank of Japan will deliberate on the appropriate balance between information gathering and timely intervention at each meeting, keeping in mind that core inflation is nearing the 2 percent threshold. Himino's economic and price outlook assessment remains largely unchanged since the Bank's previous meeting in July, attributing recent GDP data weakness to technical factors.

Himino highlighted inflationary pressures stemming from Middle East war-related fuel cost surges, strong global demand for artificial intelligence, and high import prices due to a weak yen. Himino also warned that if underlying inflation surpasses the 2 percent target, it could negatively impact the economy, urging greater attention to upward price risks.

He did not explicitly confirm or deny a September rate increase, but indicated a hawkish stance, similar to previous expectations. Market analysts anticipate a September rate hike, with some believing the Bank will proceed more aggressively in future hikes than the current approximately biannual pace.