BoJ's Tamura: Gradual rate hike in a timely manner

The Bank of Japan (BoJ) board member Naoki Tamura on Thursday suggested a gradual rate hike in a timely manner. Tamura added that the central bank to raise rates to approximately 1% by the latter half of fiscal 2025. 

Key quotes 

Suggests gradual rate hike in a timely manner. 

Worried about potential negative impact of high rice prices and prolonged inflation over 2% for almost three years on consumption. 

A 0.75% rate would still be negative in real terms.

No preconception on impact of rate hike. 

Supply constraints putting upward pressure on prices, output gap may already be positive. 

Corporate and household inflation expectations increasing, reach approximately 2% levels. 

Building upward price risks. 

Expects interest rate to stay at 1% in second half of FY 2025. 

Believes interest rates should be raised to achieve a nominal neutral level of at least 1%. 

Personally don't think we can say BOJ's past massive monetary easing had a positive effect as a whole given strong side-effects.

Must scrutinise whether prolonged monetary easing could cause problems such as excessive yen falls and housing price spikes. 

Market reaction  

At the press time, the USD/JPY pair is down 0.49% on the day to trade at 151.94.