Bank of Japan Governor Kazuo Ueda signaled that the central bank may raise its short-term policy rate, the benchmark interest rate, at the next monetary policy meeting scheduled for mid-this month.
Speaking at a lecture hosted by Kyodo News on Wednesday, Ueda hinted at the possibility of raising the current rate of around 0.75% at the monetary policy meeting set for the 15th and 16th of this month, saying, "Even amid uncertainty over the Middle East situation, there is a need to firmly discuss the appropriateness of a rate hike."
After attending the Group of Seven (G7) finance ministers and central bank governors meeting held in Paris, France, on the 19th of last month (local time), Ueda also expressed at a press conference his view that the impact of Middle East instability on Japan's economy and prices is gradually emerging.
If the Bank of Japan raises rates at the next monetary policy meeting, the rate is widely expected to climb 0.25 percentage point from the current 0.75% to around 1.0%. Ueda emphasized the need to raise rates at an appropriate time, saying, "If a rate hike is delayed, there is a concern that it could place a significant burden not only on the economy but also on markets and the financial system."
Not only Ueda but also other BOJ Policy Board members are increasingly raising the need for a rate hike amid the weakening yen and high inflation. Junko Koeda, a Policy Board member who voted in favor of the BOJ's previous decision to hold rates steady, said in a lecture on the 21st of last month, "It is necessary to continue raising the policy rate to adjust the degree of monetary easing."
