BoJ's Tamura: Japan's neutral rate is about 2%

Bank of Japan (BoJ) board member Naoki Tamura said on Thursday that Japan's neutral rate is about 2% and it is important to push the policy rate closer to the neutral level to avoid being forced into sharp rate hikes later.

Key quotes

Japan's neutral rate is about 2%. 

I envision rate hikes every few months toward about 2% neutral level. 

If chances of upside price risks rise, BOJ should not hesitate to speed up rate hikes or increase rates by bigger margin. 

Underlying inflation has already hit 2%. 

Prices face upside risks despite Middle East developments. 

Central bank faces different situation from Fed, ECB as policy rate remains below neutral, inflation expectations not firmly anchored. 

I voted against pause on taper from next fiscal year, says central bank should normalize bond holdings swiftly. 

Recent increase in long-term rates aligns with fundamentals, reflects market participants' views on inflation, monetary and fiscal prospects. 

In the long term, BOJ must assess suitable balance sheet size from liability side. 

Premature to start specific talks now, but future debate on suitable reserve level needed.

Inflation expectations have approximately hit 2%, continuing to rise further. 

Concern mounting that firms will transfer costs faster and with larger margins than in 2022.