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Bank of Japan (BOJ) board member Kazuyuki Masu signaled growing support for an interest rate hike, stating that the central bank should act quickly if Japan’s economy shows no clear signs of slowing down. His comments have strengthened market expectations that the BOJ could raise rates at its next policy meeting in June.
Speaking on Thursday, Masu said he previously believed there was no need for an immediate rate increase, but recent economic conditions may justify faster action. He emphasized that if incoming data continues to show stable growth, the BOJ should move “at the earliest stage possible” to prevent inflation from accelerating beyond its 2% target.
The BOJ kept its benchmark interest rate unchanged at 0.75% during its April meeting. However, three of the nine board members pushed for an increase to 1.0%, reflecting growing concern over inflationary pressure caused by rising global energy prices linked to the Middle East conflict.
Masu’s latest remarks are viewed by analysts as a strong hawkish signal. Financial markets are already pricing in a high probability of a June rate hike, while economists surveyed by Reuters also expect tighter monetary policy soon.
Japan’s inflation outlook has become more complicated as higher oil and fuel costs continue to pressure businesses and consumers. Combined with a weak yen and steady wage growth, inflationary risks are building across the economy. The benchmark 10-year Japanese government bond yield climbed to its highest level in nearly three decades following Masu’s comments.
Masu noted that Japan has effectively moved out of its long period of deflation and entered a new inflationary phase. He added that the BOJ should gradually raise rates toward a neutral range between 1.1% and 2.5% to maintain price stability and respond more effectively to future inflation shocks.
Investors are now closely watching upcoming speeches from BOJ officials Junko Koeda and Deputy Governor Ryozo Himino for additional clues about the central bank’s next move.
