BOJ policymaker warns of price risks that may trigger rapid rate hikes

Tokyo, Japan - Bank of Japan policymaker Kazuyuki Masu warned on September 10 that price risks could force the central bank to raise interest rates quickly if inflation surges. This comes from a speech ahead of the upcoming policy meeting, though Masu did not reveal specific details about the rate hike's pace and timing. He emphasized the growing price pressures and the need to eliminate negative real interest rates.

Masu pointed out that rising fuel and chemical prices from the Iran conflict and weakening yen could potentially increase transportation and food costs. He stressed the importance of keeping underlying inflation near the 2% target and signaled his concern over the potential downsides of excessively low borrowing costs. Analysts anticipate the BOJ will raise rates to 1.25% next week and possibly 1.75% in the second quarter of 2027, given the increasing worries about price pressures and a weaker yen.