BoJ’s Himino signals readiness for further rate hikes if economic confidence grows

BoJ Deputy Governor Ryozo Himino reaffirmed the central bank’s commitment to adjusting its monetary policy if confidence in the economic outlook strengthens. In a speech, Himino stated that if BoJ gains “growing confidence” in its economic and price forecasts, it “will adjust the degree of monetary accommodation,” signaling readiness for rate hikes ahead.

Himino outlined the baseline scenario for fiscal 2025 and 2026, describing it as a “reasonably balanced state” where inflation aligns with the price stability target, and economic growth “slightly above cruising speed”. However, he cautioned against two risk scenarios: one where inflation remains above 2% and another where it falls well below 2% and fails to recover.

Addressing recent financial market volatility, Himino noted that Yen’s appreciation might ease the import cost pressures faced by small and medium-sized enterprises, though it could reduce yen-denominated profits for export industries. He reassured that Japanese firms have developed competitive strengths. Stock price volatilities, while influential, should not significantly undermine business sentiment.

Full speech of BoJ’s Himino here.