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BoJ Board Member Asada says must be mindful of expected impact of past rate hikes on the economy and that financial conditions remain accommodative, while he added that they need to watch downside economy risks from rate hikes

Newsquawk Staff ·

Says

  • Underlying inflation is hovering around levels consistent with the BoJ's price target.
  • Need to be cautious about the pace of rate hikes.
  • Inflation is not necessarily driven by demand.
  • The economy and consumer spending are not particularly strong.
  • With the BoJ's policy rate now within the estimated neutral range, further rate hikes could have a greater impact on the economy.
  • Must be mindful of the risk that rate hikes could hurt the economy and push down underlying inflation.
  • It is encouraging that real wages have been rising.
  • Mindful of the risk that an overshoot of underlying inflation above the BoJ's target could negatively impact the economy.
  • However, there is also a risk that further rate hikes could push down inflation if they weigh on economic growth.
  • BoJ can assess actual consumer inflation data to gauge the risk of underlying inflation overshooting 2%.
  • The likelihood of interest rates affecting the economy is higher than before.
  • Current price increases are not necessarily demand-driven, judging by weak growth and consumption.
  • Even if the BoJ raises rates in the future, it must remain cautious about the pace of hikes.

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