BOJ's Himino Vows Inflation Vigilance as Rate-Hike Bets Mount
By Megumi Fujikawa
SAITAMA, Japan--The Bank of Japan remains alert to inflation risks and will discuss the need to tighten policy, Deputy Gov. Ryozo Himino said, as markets increasingly bet that the next rate hike is near.
"It is important to stabilize underlying inflation at a level around 2%," Himino said in a speech Thursday to business leaders in Saitama, a city just north of Tokyo.
"If underlying inflation deviates upward to a level above the price stability target of 2%, that would have an adverse impact on the economy, and we should pay greater attention to the upside risk to prices than in the past," he added.
Speculation about potential monetary tightening at the BOJ's meeting on Sept. 17-18 has intensified following Tokyo's joint intervention with Washington to support the yen. The overnight index swaps market is pricing in nearly a 90% chance of a rate increase at the upcoming meeting.
Himino reiterated the bank's long-standing stance of seeking further rate hikes based on economic, price and financial conditions, noting that the nation's financial conditions are still accommodative.
Treasury Secretary Scott Bessent has voiced confidence in BOJ Gov. Kazuo Ueda's handling of policy-a remark market participants interpreted as a signal that the U.S. favors further monetary tightening in Japan.
Despite the joint intervention efforts, the yen remains soft. It was last hovering around 159.35 against the dollar, remaining at levels that present a threat to the stability of Japan's price trends.
The BOJ maintained its policy rate at 1% at its previous meeting in July as policymakers examined the effects of its previous hike in June.
Himino said the central bank will examine risks to the economic outlook, including the impact of the Middle East conflict, foreign-exchange rates and demand related to artificial intelligence.
"Raising rates in a timely manner will help avoid inflation acceleration and abrupt rate hikes in the future," ultimately helping smaller companies, mortgage borrowers, and public finances, he said.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
(END) Dow Jones Newswires
August 26, 2026 22:53 ET (02:53 GMT)
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