URAWA: Bank of Japan Deputy Governor Ryozo Himino said on Thursday raising interest rates in a timely manner will help avoid a spike in inflation that would require abrupt rate hikes in the future.
"If underlying inflation deviates above our 2% target, that would have an adverse impact on the economy. We should pay greater attention to upside risks to prices than in the past," Himino said in a speech to business leaders.
"In-depth deliberations should be held at each monetary policy meeting with these perspectives in mind," he said.
Himino said adjusting still-loose financial conditions through rate hikes would help distribute assets more efficiently to investment with growth potential.
With underlying inflation approaching 2%, the BOJ must focus on stabilising price growth around that level, he added.
A weak yen, for one, could push up inflation at a faster pace than in the past, Himino said, adding that the impact of exchange-rate moves on inflation is among key factors the BOJ will look at in guiding policy.
"As we are still pressing on the accelerator, or keeping financial conditions accommodative, I believe we will need to ease off in a timely manner through rate hikes," he said.
"In doing so, we need to check various bits of information" including economic and price developments and financial conditions, Himino said. - Reuters
