Bank of Japan policy board member Kazuyuki Masu said on Thursday that the central bank expects to keep raising interest rates while financial conditions remain accommodative. However, the timing and pace of future increases will depend on the likelihood of meeting the BoJ’s baseline projections, while taking into account risks such as oil-price movements, AI-related demand and foreign-exchange volatility.
Key quotes
Underlying inflation remains below 2%, although it is now quite close to that level.
The BoJ expects to continue raising interest rates given the current accommodative financial conditions.
The timing and pace of rate increases will depend on progress toward the Bank’s baseline projections, while accounting for risks from oil prices, AI demand and foreign-exchange fluctuations.
Avoiding a sharp overshoot in underlying inflation above 2% is the most important objective.
Rising fuel and chemical-product prices could represent a one-off shock, but they may also affect prices more broadly through higher distribution costs.
Market reaction
At press time, USD/JPY was up 0.05% for the day at 153.60.
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