Key facts
- Bank of Japan Deputy Governor Ryozo Himino advocated for timely interest rate hikes to prevent future abrupt increases.
- Himino cited rising fuel costs, AI demand, and import prices as contributing factors to inflation.
- Core consumer prices in Tokyo increased by 1.8% in August, approaching the BOJ's 2% inflation target.
- An inflation gauge excluding fresh food and fuel rose 2.0% in August, signaling broadening price pressures.
- The BOJ previously kept monetary policy steady in July but noted mounting inflation risks.
Bank of Japan Deputy Governor Ryozo Himino has called for timely interest rate hikes to preempt a future surge in inflation that would necessitate abrupt policy tightening. Himino indicated that exceeding the central bank's 2% inflation target would negatively impact the economy and stressed the need for increased vigilance regarding upside inflation risks. He suggested that these considerations should be part of ongoing deliberations at every monetary policy meeting. His remarks come as core consumer prices in Tokyo rose 1.8% in August, nearing the BOJ's target and signaling broadening price pressures, partly attributed to the Middle East conflict. An index that strips out volatile fresh food and fuel costs, closely watched by the BOJ, increased to 2.0% in August. While Himino avoided signaling a specific timeline for a September rate hike, sources suggest the BOJ is preparing to raise rates soon and may accelerate its pace of increases thereafter. The central bank had previously maintained its monetary policy in July but acknowledged mounting inflation risks.