Key facts
- Underlying inflation is close to the BOJ's 2% target.
- Financial conditions remain accommodative.
- Delaying monetary adjustments could hurt the economy.
Deputy Bank of Japan Governor Ryozo Himino said on Wednesday that Japan's underlying inflation is close to the central bank's 2% target and financial conditions remain accommodative, signaling readiness to raise borrowing costs. He noted that rising fuel and raw material costs, along with strong global AI demand boosting exports and capital expenditure, are putting upward pressure on prices. Himino warned that delaying necessary adjustments to monetary support could materialize inflation risks and harm the economy in the long run. Meanwhile, former BOJ policymaker Sayuri Shirai noted mixed messaging from the BOJ and the Takaichi government, which she believes is leaving investors guessing about Japan's policy direction. Shirai also questioned the government's stance, pointing to a mismatch between Prime Minister Takaichi's preference for low rates and the Finance Ministry's interventions to support the yen.