BOJ Board Member Calls for Rate Hikes to Avoid Inflation Overshoot

By Megumi Fujikawa

A Bank of Japan policy board member emphasized the need for further interest-rate hikes and warned of upside risks to inflation, likely fueling market speculation about faster monetary tightening.

"To complete the normalization of monetary policy in Japan, I am convinced that the bank needs to raise the policy interest rate further," Kazuyuki Masu said in a speech to business leaders in Fukui Prefecture, central Japan, on Thursday.

"What is most vital from now on is to ensure that the underlying inflation rate does not significantly exceed 2%," he said, adding that trend inflation is getting "very close" to the central bank's target.

Markets have almost fully priced in an interest-rate increase at the BOJ's Sept. 17-18 meeting. Persistent inflationary concerns and implicit U.S. pressure on Japan to raise rates have heightened expectations for immediate action.

Some market participants are now bracing for an accelerated pace of monetary tightening following hawkish comments from another policy board member last week.

Reflecting rate-hike views, the yield on 10-year Japanese government bonds recently reached a 30-year high of 3%, while the yen briefly recovered to the 152 mark against the dollar for the first time since February.

Masu, a former executive at Japanese trading company Mitsubishi Corp., said the impact of higher energy costs may not be temporary shocks but could instead become "enduring trends" that push up overall prices. He also said that the effects of a weak yen are becoming more pronounced than in the past.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

September 09, 2026 22:26 ET (02:26 GMT)