TOKYO (The Capital Post) — The Bank of Japan (BOJ) is poised to keep raising interest rates as part of a gradual shift toward a more neutral monetary policy, its Deputy Governor Ryozo Himino said in Tokyo on Monday, underscoring policymakers’ cautious yet persistent approach to tightening.
Himino stressed that while Japan’s underlying inflation has steadily increased and is approaching the BOJ’s 2 per cent goal, it remains premature to declare that the target has been firmly achieved. As a result, he suggested that further moderate rate increases will be needed to continue reducing monetary accommodation over time.
“The impact of past interest rate hikes on Japan’s economy appears limited so far,” Himino said in his remarks, adding that decisions on future rate moves should reflect a comprehensive assessment of data rather than being tied purely to market fluctuations.
The BOJ’s benchmark interest rate has been rising in recent policy actions after the central bank ended its ultra-loose monetary stimulus in 2024. Markets are now pricing in expectations of further rate increases, potentially lifting the policy rate from the current 0.75 per cent toward around 1.0 per cent in the months ahead.
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However, Himino did not provide specific timing for upcoming hikes, saying that policymakers would proceed gradually and base decisions on developments in economic activity, prices and financial conditions.
External challenges — including a weaker Japanese yen that boosts import costs and geopolitical uncertainties — continue to complicate the BOJ’s outlook. Still, Himino emphasised the importance of steady policy execution to build confidence among market participants and avoid overreacting to short-term financial market swings. – The Capital Post