Bank of Japan board member Naoki Tamura presented his most detailed roadmap yet for policy normalization on Thursday, stating that the central bank should raise interest rates by 25 basis points every few months until the policy rate reaches around 2%, which he considers a neutral level. Tamura said, “the baseline path I envisage is raising the policy interest rate by 0.25 percentage points at intervals of a few months toward the neutral interest rate level of 2 percent,” underscoring the BoJ’s increasingly hawkish stance after last week’s rate hike to 1.0%.
He argued that inflation risks have sharpened, with core inflation already at the bank’s 2% target and inflation expectations continuing to rise. Tamura noted that firms are passing on higher import costs “more quickly, significantly and broadly” than after Russia’s invasion of Ukraine in 2022, indicating a structural shift in corporate pricing behavior. While Middle‑East tensions have pushed energy prices higher, he emphasized that upside inflation risks merit attention regardless of geopolitical developments.
Tamura also left open the possibility of accelerating tightening if inflation pressures prove more persistent. “If the chance of upside price risks materializing heightens, it’s necessary to accelerate the pace of rate hikes without hesitation by increasing the frequency or size of rate hikes,” he said. Although regarded as one of the BoJ’s most hawkish policymakers, his remarks reinforce the message from last week’s policy meeting and Wednesday’s Summary of Opinions that the Board’s debate has moved firmly toward how quickly, rather than whether, rates should continue to rise.
