Key facts
- Underlying inflation is around 2% and may exceed that level.
- BOJ should not be overly cautious about raising interest rates.
- Middle East conflict may push inflation above target.
Bank of Japan board member Junko Koeda stated on Thursday that the central bank should not be overly cautious about raising interest rates, citing considerable upside risks to inflation. In a speech to business leaders in Kumamoto, southern Japan, Koeda emphasized the need for timely interest rate adjustments based on economic and price conditions, while considering the neutral interest rate. She noted that underlying inflation is already around 2% and could exceed that level due to the Middle East situation. Koeda was among those who voted to hold rates steady at the last policy meeting on April 28, but her recent comments suggest a shift towards supporting rate hikes.