What specific inflation-related concern did BOJ board member Kazuyuki Masu raise that could trigger rapid rate hikes?

Masu warned that 'if inflation accelerates here, there is a risk we might inevitably need to rapidly raise interest rates,' citing Japan's 'unaccommodative' financial conditions and the fact that 'underlying inflation is very close to its 2% target' — with the key concern being broadening price pressures from the Middle East war and weak yen, which are driving up producer prices and enabling firms to pass on higher costs (e.g., fuel, chemicals, transportation, food) to consumers more persistently than in the past.

Why does Masu argue the BOJ must raise rates further, and what benchmark does he use to justify this?

Masu argues the BOJ must raise its policy rate further because 'the BOJ's policy rate remains below the estimated neutral range' — which staff estimates at 1.1% to 2.5% — and 'has been so for a very long time'; he states it is 'unnatural for the BOJ's policy rate to remain this low,' and that raising it into the neutral range is necessary to 'ensure the flexibility needed to swiftly adjust the policy rate in either direction, depending on economic conditions,' while also pulling real interest rates out of negative territory to counter the 'demerits of too-low borrowing costs.'

BOJ Policymaker Warns of Price Risks Triggering Rapid Rate Hikes

Sep 9, 2026

A BOJ board member warned that rising fuel, chemical, and food prices could accelerate inflation, potentially forcing rapid interest rate hikes in September. Analysts expect a rate increase to 1.25% next week amid persistent price pressures.

reuters

2026-05-13

BOJ Board Member Masu Calls for Early Rate Hike

2026-09-09

BOJ Policymaker Warns of Price Risks Triggering Rapid Rate Hikes

BOJ Policymaker Warns of Price Risks Triggering Rapid Rate Hikes

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