Bank of Japan (BOJ) Deputy Governor Ryozo Himino stated that the central bank may consider raising interest rates if it gains more confidence in its economic and inflation forecasts. Decisions on rate hikes will depend on a thorough evaluation of data at each policy meeting, with no fixed timeline, he added.
Himino emphasized that the BOJ will assess various factors, including U.S. employment and consumption data, as well as Chinese consumption, as these have become increasingly relevant. The bank will also closely monitor the impact of wage increases on service prices and import prices influenced by exchange rates.
While full-year data will only be available after the fiscal year ends, the Bank of Japan might not wait that long to decide on further hikes. Himino highlighted the importance of staying alert to emerging developments outside of current risk scenarios.
The BOJ raised short-term rates to 0.25% in March, signaling progress toward its 2% inflation target. Governor Kazuo Ueda has indicated that the Bank of Japan is prepared to continue raising rates if economic conditions align with projections. However, concerns about U.S. economic uncertainties and market volatility mean the bank will take a cautious approach.
The Bank of Japan is expected to maintain its rates at the upcoming October meeting, but improving economic conditions could make a December or January rate hike more likely.