BOJ’s Tamura calls for rate hikes every few months toward 2%

BOJ board member Naoki Tamura outlined a path of quarter-point rate hikes every few months toward a neutral rate of about 2%, in a Wednesday speech in Hyogo.boj
Tamura broke with the BOJ’s official view, declaring underlying inflation has already hit the 2% target, citing three years of on-target wage growth.boj
His remarks followed the BOJ’s June 15 rate hike to 1% — the highest since 1995 — and a meeting summary showing other members echoing hawkish sentiment.reuters

BOJ’s Tamura Calls for Rate Hikes Every Few Months Toward 2%

Bank of Japan board member Naoki Tamura laid out a case for steady rate increases at intervals of a few months, targeting a neutral rate of around 2 percent, in a speech delivered at a meeting with local business leaders in Hyogo on Wednesday.

Tamura, one of the BOJ’s most hawkish policymakers, said his baseline policy path envisions raising the policy interest rate by 0.25 percentage points at intervals of a few months toward the neutral level, according to the text of his remarks published on the BOJ’s website. He added that if upside risks to prices become more likely to materialize, “I consider it necessary to accelerate the pace of rate hikes without hesitation by increasing the frequency or size of rate hikes.”boj

Inflation Target Already Met, Tamura Says

Tamura broke with the BOJ’s official assessment by declaring that underlying consumer price inflation has already reached a level consistent with the bank’s 2 percent price stability target. The BOJ’s baseline view holds that underlying inflation will reach that level between the second half of fiscal 2026 and fiscal 2027.boj

He pointed to three consecutive years of wage growth in line with the target, firm and household inflation expectations rising to approximately 2 percent, and more active corporate price-setting behavior as evidence supporting his conclusion. The speech comes just over a week after the BOJ raised its policy rate to 1 percent in a 7-1 vote at its June 15-16 meeting — the highest level since 1995.boj

Middle East Tensions Add Upside Price Risk

Tamura warned that ongoing tensions in the Middle East pose a risk of prices deviating upward from the BOJ’s forecasts, noting that the pass-through of higher import prices to selling prices may occur “more quickly, significantly, and broadly” than during the 2022 commodity price surge following Russia’s invasion of Ukraine.boj

His remarks align with views expressed in the summary of opinions from the June meeting, released Wednesday, which showed some board members calling for rate hikes at intervals of a few months and one member estimating the neutral rate at around 2 percent. A Bloomberg survey earlier this month found economists expect rates to reach 1.25 percent by year-end, but Tamura’s comments suggest a more aggressive trajectory is under consideration within the nine-member board.bloomberg