BOJ Deputy Governor: More Rate Hikes Likely, But Not in a Rush

Bank of Japan (BOJ) Deputy Governor Ryozo Himino has indicated that the central bank is likely to raise interest rates further, but not in a hurry, as it seeks to control inflation while supporting economic growth. In a speech to local business leaders in Yamanashi, central Japan, Himino emphasized that the BOJ would continue to monitor economic and price developments closely and adjust its monetary policy accordingly.

Himino's comments come on the heels of the BOJ's decision to raise its benchmark interest rate by 25 basis points (bps) in January 2025, the first increase in three consecutive meetings. The rate hike brought the policy rate to its highest level since 2008, as the BOJ aims to achieve its 2% inflation target.

The BOJ's latest Outlook Report projects that underlying consumer inflation will be at a level generally consistent with the 2% target in the second half of the projection period from fiscal 2024 through 2026. However, the central bank remains cautious about external risks, such as global uncertainties from the US and geopolitical tensions, which could impact the domestic economy and inflation outlook.



Himino's remarks suggest that the BOJ is committed to pursuing a gradual and measured approach to rate hikes, balancing the need to control inflation with the potential negative impacts on economic growth and employment. The central bank will continue to assess incoming data, the evolving outlook, and the balance of risks at each meeting, ensuring that its policy remains flexible and responsive to changing economic conditions.

Market reactions to Himino's speech were mixed, with the yen initially strengthening against the US dollar before retreating slightly. Investors are likely to remain focused on the BOJ's future policy intentions and the potential impact of rate hikes on the Japanese economy and financial markets.

In conclusion, BOJ Deputy Governor Ryozo Himino's comments indicate that the central bank is likely to raise interest rates further, but not in a rush, as it seeks to control inflation while supporting economic growth. The BOJ will continue to monitor economic and price developments closely and adjust its monetary policy accordingly, ensuring that its policy remains flexible and responsive to changing economic conditions.