Bank of Japan to continue raising rates to curb inflation
In Japan, Bank of Japan board member Kazuyuki Masu said that the regulator will continue raising its key interest rate so that underlying inflation does not significantly exceed the 2% target. According to The Japan Times, he said this on September 10 during a speech to business representatives in Fukui Prefecture.
Inflation is close to the target
Masu explained that the Bank of Japan will continue raising rates because current price dynamics are very close to 2% and financial conditions remain accommodative. According to him, the most important task going forward is to prevent underlying inflation from significantly exceeding this level.
The board member's comments supported widespread expectations that the Bank of Japan may raise borrowing costs next week.
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Market expectations
Swap contracts indicate that the market estimates the probability of raising borrowing costs from the current level of 1% at about 97%. The decision is expected after the conclusion of the Bank of Japan's two-day meeting on September 18.
Masu's statement also indicates that the regulator does not plan to end monetary policy tightening even when the key rate enters the lower range of the estimated neutral level for the first time in the current tightening cycle.
