Bank of Japan official open to accelerating rate hikes as inflation risks draw attention

(1) According to informed sources, due to the persistent weakness of the yen intensifying upward inflation risks, Bank of Japan officials are open to accelerating the pace of interest rate hikes, and this could proceed at a rate beyond the general expectations of economists. (2) The sources stated that officials are well aware that most observers expect the central bank to raise interest rates about once every six months, but they are also willing to act ahead of schedule if necessary, with no preset interest rate hike plan at the moment. (3) The market widely expects the Bank of Japan to keep its policy unchanged at the July 31 policy board meeting; previously, the bank had raised the benchmark interest rate to 1% last month, the highest level in 31 years, and most observers expect the next rate hike may come in December. (4) The officials pointed out that, given the underlying inflation rate has already approached the 2% target level, it is especially important at present to closely monitor the upside risks of inflation.