Japan's Former BOJ Official Suggests Rate Hike Amid Middle East Conflict

Japan's former Bank of Japan (BOJ) Policy Board member, Seiji Anda, indicated on Tuesday that the BOJ might raise interest rates before July due to the Middle East conflict driving up oil costs. According to Jin10, Anda highlighted the risk of the central bank falling behind in addressing rising inflation pressures. He noted that the core inflation rate has reached the BOJ's 2% target, and last week's Tankan survey showed corporate five-year inflation expectations at 2.5%. Anda pointed out that the surge in oil prices and supply constraints caused by the Iran conflict provide further justification for the BOJ to increase its short-term policy rate from the current 0.75%. He stated, "The BOJ should raise rates to a neutral level for the economy as soon as possible," suggesting Japan's neutral rate might be around 1.25%. However, Anda mentioned that the likelihood of an April rate hike is "50%" due to the volatility in markets and the uncertain economic outlook caused by the Iran conflict.