BoJ’s Masu says expect to continue raising rates given current accommodative financial conditions

Bank of Japan (BoJ) policy board member Kazuyuki Masu said on Thursday that the central bank expected to continue raising interest rates given current accommodative financial conditions. However, the pace and timing of rate hike will be decided based on likelihood of achieving our baseline projections as well as risks with eye on impact of oil price moves, AI-demand and foreign exchange fluctuations.

Key quotes

Underlying inflation still below 2% but quite close to that level.

BoJ expected to continue raising interest rates given current accommodative financial conditions.

Pace, timing of rate hike will be decided based on likelihood of achieving our baseline projections as well as risks with eye on impact of oil price moves, ai-demand, FX fluctuations.

Most important thing is to avoid underlying inflation from overshooting sharply from 2%.

Rise in fuel, chemical goods prices could be one-off shock but may have broader impact on prices via distribution costs.

Market reaction

At the time of writing, the USD/JPY pair is up 0.05% on the day at 153.60.