BoJ board member calls for immediate rate hike

(Sharecast News) - Bank of Japan board member Kazuyuki Masu has called for an interest-rate hike to get ahead of an impending surge in inflationary pressures, so long as the economy remains resilient. In a speech on Thursday, Masu noted that there were "mixed views" among policymakers at the April monetary policy meeting on whether a rate hike was necessary, with three of the BOJ's nine board members calling for an increase in the policy rate to 1.0%. Instead, rates were held steady at 1.0%.

"I myself judged at the April MPM that the situation did not warrant a hasty policy rate hike," he said.

"That said, if statistical data do not indicate clear signs of an economic downturn, I believe it is desirable to raise the policy rate at the earliest stage possible."

After a long period of chronic deflation following the financial crisis of 2008-09, Japan transitioned into inflation in early 2022, though price pressures have eased as of late because of stabilising rice prices, the abolition of a gasoline tax rate and measures to make reduce the costs of high school tuition.

However, the Iran war has placed central banks worldwide in an "unusually difficult decision-making environment", where energy shortages could both slow down growth but cause a rise in inflation.

Markets are currently pricing in a 70% possibility of a rate hike at the BOJ's next meeting in June.