FX.co ★ BoJ Masu Says Further Rate Hikes Needed

In a recent speech, Kazuyuki Masu, a board member of Japan's central bank, emphasized the necessity of further interest rate hikes to advance the normalization of monetary policy. Masu highlighted that raising interest rates would narrow the policy gap between Japan and other major economies, a disparity that has significantly contributed to the prolonged weakness of the yen. This currency weakness has, in turn, escalated import costs for both businesses and households. Masu underscored the importance of careful execution of policy tightening. He advocated for timely and measured rate increases to maintain underlying inflation below 2%, cautioning against overly aggressive hikes that might disrupt the steady rise in wages and inflation. This speech marks Masu's first public address since joining the nine-member board of the Bank of Japan in July. At that time, he described his approach as a balance between hawkish and dovish perspectives.