BOJ Deputy Governor Discusses Interest Rate Policy

By Leika Kihara

TOKYO (Reuters) – Bank of Japan Deputy Governor Ryozo Himino stated on Thursday that the central bank will consider increasing interest rates if there is "greater confidence" that its economic and price forecasts will be realized.

Himino indicated that the BOJ's decision on the timing of interest rate hikes will depend on the "totality" of data presented at each policy meeting.

> "We are not on a pre-set course," Himino mentioned, emphasizing the BOJ's plan to "carefully assess incoming data, the evolving outlook, and the balance of risks at each meeting."

He noted that the type of data the BOJ focuses on changes over time, with current attention on U.S. employment and consumption data, as well as Chinese consumption.

> "Later in the year, we will have more data on the pass-through of this year's wage hike to service prices, and qualitative and quantitative information related to the 2025 wage negotiations," Himino added during a seminar.

The BOJ is also set to receive more data on how exchange rate movements may impact inflation through import prices, continuously evolving their data priorities.

While complete statistics for the fiscal year won’t be available until after it concludes, Himino stated that the BOJ would not wait for those figures before determining whether the economy is ready for further rate hikes.

> "More importantly, we monitor data to detect developments that are not already covered in our risk scenarios. Looking at data outside the current priority list is equally important," he explained.

The BOJ discontinued negative interest rates in March and raised short-term borrowing costs to 0.25%, believing Japan was making progress toward its 2% inflation target.

Governor Kazuo Ueda has indicated the BOJ's readiness to continue raising interest rates if the economy and prices align with the central bank’s forecasts.

However, Ueda has also pointed out that the BOJ can afford to carefully consider risks like U.S. economic uncertainties and unstable market movements before deciding on future rate hikes.

It is widely anticipated that the BOJ will maintain its current interest rates at the upcoming meeting on Oct. 30-31, but improving economic conditions and diminishing U.S. recession concerns may lead to discussions of a rate hike in December or January.