Senior BOJ official: Delay in adjusting rates could lead to economic downturn in future
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Senior BOJ official: When upside inflation risk high as is the case now, delay in adjusting degree of stimulus could materialise such risk, lead to economic downturn in future Appropriate monetary policy would achieve stable inflation, put economy in sustainable growth path This
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The desk views the recent commentary from BOJ policymaker Masu as a critical signal regarding the potential for yen depreciation to elevate inflation expectations in Japan. Per the full note [source], Masu highlighted the risks associated with rising inflation expectations that could stem from a weaker yen, emphasizing the need for the BOJ to maintain a vigilant policy stance. This aligns with our assessment that the BOJ may need to adjust its policy rate in response to evolving economic conditions, particularly as Japan grapples with inflationary pressures that have emerged more prominently than in previous decades. Current market sentiment reflects a cautious approach, with traders anticipating potential policy shifts in the near term.
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