Overview
- Masu said underlying inflation remains below 2% but is drawing very close as firms and households shed deflationary habits.
- He argued that continuing with further policy rate increases will be needed to complete monetary policy normalization.
- He warned that excessive tightening could disrupt a budding cycle of wage and price increases, signaling a cautious approach.
- Speaking to business leaders in Matsuyama, he called for timely and appropriate moves to keep inflation from exceeding the target.
- The BOJ raised its short-term rate to 0.75% in December and held in January, and markets price roughly a 60% chance of an April hike as yen weakness and food costs lift pressures.