BOJ must conduct rate hikes nimbly, hawkish board member says

Bank of Japan policymaker Hajime Takata emphasized the need for an early rate hike, advocating for a nimble approach to further increases rather than being confined to a predetermined interval or range. During a speech in Sapporo prior to the September 17-18 BOJ policy meeting, Takata, a vocal member of the Policy Board, stated that the central bank must demonstrate its commitment to curbing upward inflation trends and take into account the effects of currency fluctuations on prices.

He pointed out that the BOJ must adopt a nimble approach to tackle evolving circumstances, including global developments, and emphasized that this year marks a transition towards a more flexible, data-driven methodology for interest rate hikes in response to both domestic and international economic conditions. Takata noted that the risks to Japan's economy, initially raised concerns about the Middle East tensions, have diminished, suggesting that 2026 will be a pivotal year to shift focus towards upward price movements.

Takata's comments came following BOJ Chairman Kazuo Ueda's announcement that the Policy Board would deliberate on interest rate adjustments during their next meeting. Ueda also mentioned in North Carolina, USA, that Japan's underlying inflation is approaching the BOJ's 2 percent price stability objective. The BOJ increased its policy rate to approximately 1.0 percent in June, marking the highest level in 31 years; at their July meeting, the eight-member Policy Board decided to maintain the rate, with Takata as the sole dissenter.

The BOJ has three additional policy meetings scheduled for this year, in September, October, and December.