Bank of Japan (BoJ) policy board member Kazuyuki Masu stated on Thursday that the central bank expects to continue raising interest rates, citing the current accommodative financial conditions as a key factor supporting further tightening. Masu emphasized that while underlying inflation remains below the BoJ’s 2% target, it is now quite close to that level, suggesting progress toward the central bank’s policy goals [1].
Masu clarified that the pace and timing of future rate hikes will depend on the likelihood of achieving the BoJ’s baseline projections and will take into account various risks, including movements in oil prices, demand related to artificial intelligence, and fluctuations in foreign exchange rates. He also highlighted the importance of preventing underlying inflation from overshooting the 2% target sharply [1].
Additionally, Masu noted that increases in fuel and chemical goods prices could represent a one-off shock, but warned that such price rises may have a broader impact on overall prices through higher distribution costs. At the time of reporting, the USD/JPY currency pair was up 0.05% on the day, trading at 153.60, indicating a modest market reaction to Masu’s comments [1].
CONCLUSION
BoJ’s Masu’s remarks reinforce expectations for continued rate hikes, contingent on inflation trends and external risks. The market response was muted, with only a slight uptick in USD/JPY, reflecting cautious optimism about Japan’s monetary policy outlook.