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Ex-BOJ Official: October Rate Hike 'Realistic Possibility' with 20-30% Probability
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Kazuo Momma, a former executive director of the Bank of Japan (BOJ) responsible for monetary policy, stated in a media interview that the BOJ could raise its benchmark interest rate for a second consecutive month at its October policy meeting. This timeline is earlier than most economists anticipate. Momma estimated the probability of such a move at 20% to 30%, noting that while the basic pace is likely one hike per quarter, consecutive meetings are a reasonable possibility. His comments follow the BOJ's recent rate increase, which came just three months after a previous hike in June, accelerating from the prior pace of roughly one hike every six months. BOJ Governor Kazuo Ueda explained that the central bank has entered a new phase, shifting its focus from pushing core inflation to 2% to preventing it from exceeding that target. Momma interpreted Ueda's remarks as a signal to markets that faster rate hikes may be coming, as the risk of core inflation exceeding 2% is more likely to rise than fall in the next three months.
Source report
A former executive director of the Bank of Japan (BOJ) has indicated that the central bank could raise its benchmark interest rate for a second consecutive month at its October policy meeting—sooner than most economists currently expect.
Kazuo Momma, a former BOJ executive director, said in a media interview on Friday: "The basic rhythm is likely to be a rate hike every three months, but there is a reasonable possibility of consecutive rate hikes. I estimate the probability at around 20% to 30%."
Momma's remarks come just one week after Governor Kazuo Ueda led the policy board in raising interest rates. The move came only three months after the previous hike in June, marking an acceleration from the earlier pace of roughly one hike every six months.
Governor Ueda explained that the BOJ has entered a new phase, shifting its policy focus from pushing core inflation up to 2% to preventing inflation from exceeding that target.
According to Momma, this statement was intended to signal to the market that faster rate hikes may be on the horizon as the policy focus shifts.
"The BOJ has been emphasizing the risk that core inflation could exceed 2%," Momma said. "From that perspective, I believe this risk will not decrease over the next three months—rather, it is more likely to increase."
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Ex-BOJ official: October rate hike 'quite possible', delay to 2025 unlikely