BoJ deputy governor Ryozo Himino said the central bank should persist with policy rate increases while adjusting the degree of monetary accommodation in line with economic activity, prices and financial conditions. He said the risk of a severe downturn has diminished, even as a weak yen lifts global firms’ profits but squeezes households’ real income. Monetary policy is not designed to steer foreign exchange, though currency moves are among the factors shaping growth and prices, including via inflation expectations. Real interest rates remain negative across the short- and medium-term zone, and financial conditions are still accommodative, which he framed as supportive for the economy.
Focus on Gradual Tightening and Inflation Risks
Himino stressed the need to avoid a delayed tightening cycle that could allow inflation to rise sharply and later force rapid rate increases. The policy focus, he said, should lean more towards the outlook and risks than current conditions, with greater attention on upside price risks and the aim of stabilising underlying inflation around the 2% price stability target; an overshoot above 2% would be adverse for the economy.
Global Factors and Market Considerations
He also pointed to rising global AI demand as a factor that could lift both growth and prices, while warning that immediate market reactions can obscure broader policy implications. USD/JPY was down 0.04% at 159.24.
