By Leika Kihara
TOKYO, May 14 (Reuters) – The Bank of Japan should raise interest rates as soon as possible if there are no clear signs of an economic slowdown, Kazuyuki Masu, a member of the central bank’s board, said on Thursday, pointing to mixed views at an April policy meeting.
The remarks by Masu, who voted to keep rates steady, suggest he may join the dissenters to call for a rate hike at the BOJ’s next meeting in June.
“I myself judge that the situation did not warrant a hasty hike,” Masu said in a speech. “That said, if data do not indicate clear signs of an economic downturn, I believe it is desirable to raise rates at the earliest stage possible.”
The BOJ kept its policy rate steady at 0.75% last month, but three of the nine board members dissented and called instead for a hike to 1.0%, in a sign of growing alarm over inflationary pressures from the Iran war-driven energy shock.
Rising prices of fuel and chemical goods caused by the Iran war could prove a temporary shock, though there was concern they could push up already rising distribution costs and lead to enduring price pressures, Masu said.
“As the behaviour that took root during the period of deflation is now being unentrenched, Japan has clearly entered an inflationary phase,” he added.
“Therefore, what is vital from now on is to ensure that, through timely and appropriate policy rate hikes, the underlying inflation rate does not exceed 2%.”
The BOJ exited a decade-long massive stimulus in 2024 and raised its policy rate several times, including in December, on the view that Japan was on the cusp of durably achieving its inflation target of 2%.
(Reporting by Leika Kihara; Editing by Clarence Fernandez)
