MNI BRIEF: BOJ Needs To Raise Rate To Neutral 1% - Tamura
MNI (TOKYO) - Bank of Japan board member Naoki Tamura said on Thursday that the BOJ will need to raise the policy interest rate to about 1% in the second half of the projection period to March 2027.
“I think that the neutral interest rate is at least 1%. The BOJ needs to raise the rate to at least 1% not only to restrict the upside risk to prices but also to achieve the price stability target in a sustainable and stable manner,” Tamura told business leaders in Okayama City. (See MNI POLICY: BOJ Examines Upping Pace Of Hikes)
Tamura also said that he is concerned over growing upside risk to prices due to the labour shortages, corporate pass-through of higher labour costs to prices and the rising trend of import prices.
He added that the BOJ needs to gradually raise the policy interest rate in a timely manner to avoid rapid rate hikes, while taking developments in financial markets into consideration.
He added that it is important for the BOJ to make efforts to improve communication with markets and to pay attention to developments of financial markets and their impact on economy and prices.