BoJ’s Takata says central bank must hike rates mimbly after assessing financial conditions

Bank of Japan (BoJ) board member Hajime Takata said on Wednesday that the central bank must conduct rate hikes nimbly after assessing accommodation in domestic financial conditions and developments. Takata added that it’s necessary to monitor long-term interest rate trends closely and maintain clear market communication. 

Key quotes

Believe BoJ needs to conduct rate hikes nimbly after gauging the degree of accommodation in domestic financial conditions, in addition to examining developments overseas.

Necessary for BoJ to shift from the current stance of encouraging a rise in underlying inflation and to demonstrate to the market its determination to prevent upward deviations in prices.

Believe 2026 represents the start of a new phase, where rate hikes will not be carried out at a fixed pace.

Important to carefully monitor the risk that the divergence of monetary policy stances between Japan and other countries could bring about high volatility in FX markets.

Current situation of rising energy prices entails the risk of inflation overshooting the target.

Market reaction

At the time of writing, the USD/JPY pair is up 0.10% on the day at 160.35.