BoJ board member Kazuyuki Masu said further interest rate hikes will be needed to complete Japan’s monetary policy normalization. He noted that underlying inflation remains below 2% but is “drawing very close” to that level as firms and households gradually shed entrenched deflationary behavior.
He cautioned, however, that the Yen’s recent weakness could amplify price pressures by lifting inflation expectations, with potential spillovers into underlying inflation. Also, He highlighted processed food prices as a key area to watch, noting that surging rice prices may have made consumers more receptive to broader food price increases.
At the same time, Masu stressed the need for caution. “it is critical to ensure excessive rate hikes do not disrupt the virtuous cycle of a moderate rise in prices and wages that has finally begun to gain momentum in Japan,” he said.
