Bank of Japan's Deputy Governor, Ryozo Himino, has indicated that the institution may raise interest rates if their economic forecasts remain consistent. Speaking to business leaders in Kanagawa, Himino remarked, "Developments in pricing and inflation expectations, as well as the economic dynamics influencing them, appear largely in line with our projections."
He emphasized that should these projections persist, the Bank of Japan will adjust the policy interest rate and modify the extent of monetary easing, mirroring actions taken in both March and July of the previous year.
Nonetheless, Himino sounded a note of caution about the varied risks, both domestically and internationally, that could influence this trajectory. Particular attention will be paid to the policies of the new U.S. administration and their potential implications for Japan's economy, with the upcoming inaugural address anticipated to shed light on the administration’s strategic direction.
Domestically, Himino pointed out that anticipated wage increases in fiscal year 2025 are a critical factor for consideration, forecasting significant wage growth during that period.
The Bank of Japan is scheduled to announce its policy decision on January 24. At its December meeting, the central bank maintained its key interest rate at 0.25 percent for the third consecutive session. The negative interest rate policy was concluded in March 2024, and the rate was last adjusted upwards to 0.25 percent in July 2024.
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