BOJ's Tamura Signals Potential Rate Hikes in Timely Manner with 1% Target Amid Rising Inflation Risks and US-Japan Trade Talks

Bank of Japan (BOJ) Executive Director Tamura indicated that upward inflation risks had been elevated until March but are currently heightening again. He emphasized the need for the BOJ to raise interest rates in a timely and appropriate manner, avoiding moves that are either too fast or too late. Tamura noted that medium- and long-term inflation expectations are gradually increasing and warned of the risk that Japan's inflation expectations could overshoot further. While he does not see an imminent need for a rate hike at present, he acknowledged that if upside price risks continue to rise, the BOJ may have to act decisively and raise rates, even amid ongoing US-Japan trade talks. Tamura suggested that the BOJ should consider raising rates in several stages, aiming for a 1% target if the likelihood of durably achieving the 2% inflation goal increases.