Bank of Japan board member Naoki Tamura warned against premature monetary tightening, saying Japan must avoid returning to a period of stagnant prices and wages. In a speech in Osaka today, he cautioned against allowing inflation to persist beyond moderate levels. “If interest rates are too low relative to the inflation rate, the real value of deposits will continue to decrease, and households that do not benefit from wage increases, such as retirees, will continue to face difficult times,” he said. Tamura argued the BoJ should not rush to raise rates to restrictive levels but noted that with inflation risks tilting upward, the bank is now in a phase of considering rate hikes to bring policy closer to neutral. On external factors, he said Japan’s economy will not be immune to the impact of U.S. tariff policies but added that growth could strengthen as global economies return to a moderate expansion, with the overseas slowdown likely less severe than feared.
