Bank Of Japan Signals Gradual Interest Rate Hikes

According to Odaily, Bank of Japan Deputy Governor Shinichi Uchida indicated that the central bank will continue to gradually raise its benchmark interest rate, potentially calming speculation about an early rate hike. In a speech to business leaders on Wednesday, Uchida stated, "If the economic outlook is realized, the Bank of Japan will accordingly continue to raise policy rates and adjust the degree of monetary easing. In this regard, the key point of the outlook is that the central bank expects to achieve a 2% price stability target." Uchida noted that officials will need to monitor the economy's response to each rate increase, as the bank has already raised rates three times in the past 12 months. He highlighted the difficulty in accurately determining a neutral rate that is neither restrictive nor stimulative. His comments suggest that the central bank is unlikely to raise rates in two consecutive meetings, including a potential hike in March following a January increase. He hinted that, based on various estimates, the benchmark rate could rise to at least 1% by the end of the 2026 fiscal year.