BoJ Deputy Governor Himino said yen moves now have a bigger effect on inflation than in the past, while the Bank of Japan expects to keep raising rates.
He said the bank sees underlying inflation moving closer to 2%. However, he also warned that the risk of inflation moving away from target is tilted to the upside. He linked that risk to a more lasting shift in how firms set prices, not to a short-term energy jump.
Himino also repeated that the Bank of Japan does not target foreign exchange moves with monetary policy. However, he added that yen weakness now affects inflation more than it did before because corporate behaviour has changed.
BoJ Deputy Governor Himino Flags Rate Path
His remarks matched the bank’s guidance after its June meeting. The Bank of Japan expects to continue raising rates, although it will judge the pace and timing against the outlook and related risks. That kept attention on the bank’s tightening path.
The comments also echoed concern seen in the April minutes. Those minutes pointed to Japan’s move away from a deflationary mindset. As a result, the economy has become more sensitive to cost pressures than in earlier periods.
Yen Moves Draw Fresh Market Focus
The foreign exchange remarks drew the most market attention. Notably, they came on the same day that USD/JPY tested 161.80 before a sharp reversal. That timing gave added weight to his warning on the yen’s effect on prices.
Himino did not say the bank targets the exchange rate. However, his comments showed that the Bank of Japan is watching how currency moves feed into inflation and inflation expectations. He said those moves now pass through to prices faster and more broadly than in the past.
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