Overview
- Bank of Japan Deputy Governor Ryozo Himino told business leaders Thursday that the BOJ should raise interest rates in a timely way to avoid falling behind on inflation and the need for abrupt future hikes.
- He said underlying inflation approaching or exceeding the 2 percent target would harm the economy and highlighted three upside risks: a weaker yen, higher energy costs tied to the Middle East, and stronger global demand linked to AI.
- Himino stopped short of an explicit commitment to move in September and said policy will be decided meeting by meeting, but his remarks pushed market pricing for a September hike to roughly the mid-80s percent range.
- Markets reacted with the yen weakening to about ¥159 per dollar and a modest rise in Japanese government bond yields, reflecting traders repricing the chance of a 25 basis-point increase at the Sept. 17–18 meeting.
- The comments come as the BOJ completes a shift from very low rates to a 1.0 percent policy rate set in June, a move that could raise borrowing costs for households and firms and reshape bond flows between Japan and global markets.