A former Bank of Japan board member is signaling that Japan’s central bank could lift interest rates as many as two additional times before the close of the current fiscal year in March, following what he called a landmark shift in how the bank approaches monetary policy.
Makoto Sakurai, a former BOJ board member who says he remains in close contact with current policymakers, made the comments in an interview on Friday. He said Tuesday’s decision to push the bank’s short-term policy rate up to 1% — its highest level in 31 years — represented something fundamentally different from previous rate increases.
In the past, the Bank of Japan framed its rate hikes as a sign of growing confidence that inflation was on track to stay durably at its 2% target. This time, however, the bank justified the move as a way to get ahead of the risk that underlying inflation could overshoot that target.
