BOJ’s Koeda warns against too much caution on rate hikes
The board member reiterated that she didn't have any specific pace in mind for pushing up rates when asked about the possibility of a hike in October.
Bank of Japan board member Junko Koeda cautioned against excessive restraint in raising interest rates, indicating the central bank is on track to increase borrowing costs again soon. In a speech to local leaders in Kumamoto, Koeda emphasized the need for the bank not to be overly cautious about raising the policy interest rate.
The yen remained stable following her remarks, trading around ¥158 per dollar, despite being stronger than the previous ¥158.95 following a surge in US inflation data. Koeda's comments suggested a likelihood of another rate hike in the coming months, though she didn't push for an immediate back-to-back hike this month. She stated that the Bank should adjust interest rates in a timely manner based on economic and price conditions, considering the estimated neutral interest rate range.
Koeda's remarks, along with other BOJ officials, reinforced the expectation of further rate increases, with overnight swaps indicating a 5% chance of a hike in October and an 87% probability by December.
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