BOJ Deputy Governor Signals Need for Timely Rate Hikes
BOJ Deputy Governor Ryozo Himino says timely rate hikes can prevent future abrupt tightening if inflation exceeds the 2% target.
Bank of Japan Deputy Governor Ryozo Himino on Thursday made the case for a proactive approach to monetary policy, suggesting that raising interest rates at the right moment could prevent more disruptive measures later.
Speaking to business leaders in Urawa, Himino warned that if underlying inflation were to move significantly above the central bank's 2% target, the resulting economic strain would be considerable. He indicated that the risks of prices rising faster than expected now deserve more attention than in previous years.
"If underlying inflation deviates above our 2% target, that would have an adverse impact on the economy. We should pay greater attention to upside risks to prices than in the past," Himino said.
His remarks point to a shift in the central bank's thinking, with a greater emphasis on acting before price pressures become entrenched. Himino stressed that each monetary policy meeting should involve thorough discussions with these risks in view, suggesting that the pace of any future rate increases would be carefully calibrated to economic conditions.