Hawkish BOJ policymaker Naoki Tamura suggests potential rate hikes to address inflation risks

From Yahoo Finance: 2025-06-24 22:12:00

Bank of Japan board member Naoki Tamura suggests raising interest rates to address inflation risks, even with uncertainties over U.S. tariffs. Tamura notes accelerating inflation and potential price hikes due to labor costs. While U.S. tariffs may impact Japan’s economy, Tamura believes achieving the 2% inflation target is likely sooner than expected.

Tamura’s hawkish stance contrasts with Governor Kazuo Ueda’s cautious approach, emphasizing the need to pause rate hikes amid U.S. trade policy uncertainty. The BOJ forecasts inflation to stagnate before meeting its target by fiscal 2027, but Tamura warns of potential revisions based on U.S. tariff developments. Tariffs may slow Japan’s economic recovery, but primarily affect the manufacturing sector.

Tamura remains uncertain about the timing of future rate hikes, citing the need for more information on reaching 2% inflation. As the sole hawkish dissenter, he acknowledges the challenges posed by higher U.S. tariffs on Japan’s growth and inflation outlook. Consumer inflation in Japan has surpassed 2% due to rising raw material costs.

Tamura highlights the rise in medium- to long-term inflation expectations in Japan, driven by widespread price hikes. He emphasizes the importance of focusing on firms and households’ inflation expectations, suggesting they may have already reached 2%. Despite uncertainties, Tamura hints at the need for decisive action if price stability risks increase.

Read more: Hawkish BOJ policymaker puts market on notice for ‘decisive’ rate hikes