BoJ’s Himino says could raise rates toward neutral if underlying inflation accelerates to target

Bank of Japan (BoJ) Deputy Governor Himino said on Monday that even if headline inflation falls below 2%, the central bank could raise interest rates toward neutral if it judge underlying inflation is accelerating to our price target. 

Key quotes

Expect Japan consumer inflation to stay below 2% for some period of time. 

Good chance underlying inflation will accelerate moderately yet will keep an eye on risk expected slowdown in headline inflation could affect underlying inflation. 

Even if headline inflation falls below 2%, we could raise interest rates toward neutral if we judge underlying inflation is accelerating to our price target. 

Accommodative monetary conditions may be among factors increasing domestic property and stock prices so must watch developments carefully. 

At present, we do not see asset price moves as showing risks that warrant monetary policy response. 

Market reaction

At the time of press, the USD/JPY pair was up 0.46% on the day at 157.00.