BOJ Hawk Says Rates Should Rise Quickly as Markets Bet on Hike Next Week
Summary
- BOJ policy board member Kazuyuki Masu said Japan is no longer in deflation and that negative real interest rates should be eliminated as quickly as possible.
- Masu put the BOJ's neutral rate range at 1.1% to 2.5% and said raising the policy rate into that range is necessary for monetary policy normalization.
- Markets are betting the BOJ will raise its benchmark rate by 25 basis points to 1.25% from 1.0% at its September meeting, with the possibility of another increase in October and a faster hiking cycle of once every three months.
Forecast Trend Report by Period
A hawkish Bank of Japan policy board member said additional rate increases are needed.
BlockBeats and other outlets reported on September 10 that BOJ board member Kazuyuki Masu told a meeting Japan is no longer in deflation and that negative real interest rates should be eliminated as quickly as possible.
Masu said nominal interest rates have risen recently, but real rates remain in negative territory. Japan's underlying inflation is now quite close to the central bank's 2% target, making it necessary to raise the policy rate and adjust the degree of monetary easing.
Masu put the BOJ's estimated neutral rate range at 1.1% to 2.5%. Raising the policy rate into that range is necessary to normalize monetary policy, he added.
Markets are betting the BOJ will raise its benchmark rate by 25 basis points to 1.25% from 1.0% at its September 17-18 monetary policy meeting. Some also expect the BOJ could signal another increase in October at that meeting.
Stefan Angrick, Moody's head of Asia-Pacific economics, said Masu's remarks were another hawkish signal pointing to further BOJ rate increases. He added that the central bank could eventually shorten its hiking cycle to once every three months.
JOON HYOUNG LEE
gilson@bloomingbit.ioCrypto Journalist based in Seoul