Tamura says BoJ must raise short-term interest rates to at least 1% by the H2 fiscal 2025

Bank of Japan board member Naoki Tamura spoke today:

BOJ’s Tamura makes his case again for faster interest rate hikes

His comment on getting rates to 1% is catching headlines:

• short-term interest rates shouldd be raised to at least 1% by the second half of fiscal 2025 to manage rising inflation risks

Tamura is known for his hawkish stance. He believes inflationary pressures are increasing, necessitating rate hikes to levels considered neutral for the economy.

• expects Japan’s economy will be in a position by late 2025 to sustainably meet the BOJ’s 2% inflation target, supported by widespread wage growth, including among smaller firms
• emphasised the need for gradual and timely rate increases as the likelihood of achieving the inflation goal grows

In January the BOJ raised interest rates to 0.5%, the highest level since the 2008 global financial crisis.

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As a note, the Japanese fiscal year is from 1 April to 31 March. So I am taking a guess that H2 fiscal 2025 Tamura is referring to is some time after, say September, this year? That is still a sedate pace of rate hikes, no?

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USD/JPY dropped to lose circa 151.80 on Tamura’s remarks but has since bounced back a little:

This article was written by Eamonn Sheridan at www.forexlive.com.