Kazuyuki Masu, a board member of the Bank of Japan, or BOJ, said the BOJ will continue raising its policy interest rate and further reduce the degree of monetary easing, based on economic, inflation and financial conditions. Speaking to local business leaders in Fukui Prefecture on September 10, Masu said the most important thing from now on is to keep core inflation from significantly exceeding 2%. He noted that higher fuel and chemical prices stemming from the war in Iran have pushed up prices of many goods, while higher shipping costs for imported raw materials and rising imported fertilizer costs are factors driving food prices higher, and there is concern that these price increases may not be temporary but an increasingly prolonged trend that risks pushing overall goods prices higher. Economic data released this week supported the case for BOJ rate hikes, with second-quarter GDP revised up to 1.4% from the first quarter on an annualized basis, while wages in July rose at the fastest pace in nearly 30 years. Masu, a former executive at Mitsubishi Corp., one of Japan's largest trading companies, signaled support for a rate hike in June, which boosted market expectations that the BOJ would pursue such a policy, and Masu is the last BOJ board member scheduled to speak before next week's monetary policy meeting.
Mitsubishi Electric Corp.
Mitsubishi CorporationBOJ signals further rate hikes and reduced easing, pushing JGB yields up (bond prices down).
