FX.co ★ BoJ Koeda Urges Timely Rate Hikes Amid Inflation Risks

The Bank of Japan (BoJ) should avoid being excessively cautious about further interest rate hikes in light of persistent upside risks to inflation and still-accommodative financial conditions, board member Junko Koeda said in a speech. She argued for timely policy adjustments guided by economic and price developments, while taking into account the estimated range of the neutral interest rate.

Koeda pointed out that broad-based price increases across many consumer items, along with a shift in the distribution of price changes, indicate that underlying inflation is becoming anchored around 2%. She added that steady wage gains likewise suggest that sustained inflation is taking firmer hold in Japan.

Koeda emphasized the importance of further deepening the BoJ’s analysis of economic conditions, prices, and financial markets as positive interest rates become a normal feature of Japan’s economic environment.