BOJ on alert to price risks that may lead to faster rate hikes, sources say

The Bank of Japan remains on alert to upside inflation risks that could lead to faster interest rate hikes than markets project, said three sources familiar with its thinking.

Many central bank policymakers believe the pace and timing of rate hikes cannot be pre-scheduled, and they depend much on economic and price developments at the time, they said.

But some within the BOJ scope to raise rates at a faster pace than the dominant market view of twice a year, if price pressures from a weak yen and rising fuel costs from the US-Israeli war on Iran push up inflation at a faster-than-expected pace, the sources said.

The sources spoke on the condition of anonymity as they were not authorized to speak publicly.

Bloomberg News reported earlier on Wednesday that BOJ officials are open to raising interest rates at a faster than the consensus among economists, with the yen continued weakness adding to upside inflation risks.

The report pushed up the yen and bond yields.

Reuters

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