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Friday, June 21, 2024

BOJ Hints at Possible Rate Hike if Inflation Reaches Target

BOJ Rate Hike

BOJ Rate Hike: The Bank of Japan may raise interest rates sooner than expected if sharp declines in the yen continue to push inflation higher, according to BOJ board member Seiji Adachi.

In a speech in Kumamoto on Wednesday, Adachi said that while short-term currency moves alone would not trigger a policy shift, sustained yen weakness that significantly impacts inflation expectations could lead the BOJ to tighten monetary policy.

He noted that the BOJ must consider upside risks to prices, not just downside risks, in guiding policy. “We must avoid raising rates prematurely, but focusing too much on downside risks could force us to tighten sharply later if inflation accelerates,” Adachi said.

If underlying inflation remains on track to reach the BOJ’s 2% target, Adachi signaled the central bank may “gradually adjust” monetary support in line with economic and price trends. Some analysts interpret this as the BOJ hinting at a possible interest rate hike as soon as July.

USD/JPY Is currently at 157.688:

USDJPY 5-Minute Chart

The comments suggest the yen’s depreciation is gaining importance for the BOJ’s policy outlook. After ending negative rates in March, the BOJ may tighten policy sooner than projected if a weak yen looks set to consistently overshoot its inflation target.

Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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