BoJ Board Member Tamura said it is important to push the BoJ’s policy rate closer to neutral to avoid being forced to hike rates sharply later

Says:

• Japan’s neutral rate is around 2%.
• His view is for the BoJ to raise its policy rate once every few months towards a neutral level of around 2%.
• If upside price risks become more likely to materialise, the BoJ should not hesitate to speed up rate hikes or raise rates by a larger amount.
• Underlying inflation has already reached 2%.
• Regardless of developments in the Middle East, upside risks to prices remain.
• The BoJ is in a different position to the Fed and ECB because its policy rate is still below neutral and inflation expectations are not sufficiently anchored.
• Voted against the BoJ’s decision to pause tapering from next fiscal year as the BoJ should normalise the balance of its bond holdings as soon as possible.
• Recent rise in long-term rates is consistent with fundamentals and reflects market participants’ views on inflation, as well as the monetary and fiscal policy outlook.
• Premature to begin specific discussions now, but the BoJ should debate appropriate reserves level in the future.
• Inflation expectations have roughly reached 2% and continue to heighten further.