Himino’s direct call for “timely” rate hikes, delivered in his own words rather than through analyst interpretation, sharpens the hawkish read markets had already been building around this speech.
His framing of the choice as timely, gradual tightening versus a future spike requiring abrupt hikes gives the BOJ a clear rationale for moving sooner rather than later, and reinforces September as a live meeting
The explicit flag on yen weakness as an accelerant to inflation keeps FX front and centre in the BOJ’s reaction function, with any further yen softness now more directly linked to hike risk. Combined with his comment that policy should distribute capital more efficiently toward growth investment, the remarks read as a comprehensive case for easing off accommodative settings, not just a data-dependent caveat. — Earlier: BOJ’s Himino signals more hikes, flags growing upside inflation risk — Himino didn’t just flag hike risk, he made the explicit case for moving on rates before inflation forces the BOJ’s hand. Summary: Himino said raising rates in a timely manner would help avoid a future spike in inflation requiring abrupt hikes He said inflation deviating above the BOJ’s 2% target would hurt the economy, and the board should weigh upside price risks more heavily than in the past Himino called for in-depth deliberation on these risks at every policy meeting He said adjusting still-loose financial conditions via rate hikes would help distribute assets more efficiently toward growth investment With underlying inflation nearing 2%, he said the BOJ’s focus should be on stabilising price growth around that level He flagged a weak yen as a factor that could push up inflation faster than in the past, and said FX moves are among the key inputs guiding policy Himino said the BOJ needs to “ease off” accommodative settings in a timely way, weighing economic, price and financial data as it does so Bank of Japan Deputy Governor Ryozo Himino made his most direct case yet