Source: Golden Ten Data
Author: Xiao Yanyan

Bank of Japan Governor Naoki Tamura (Naoki Tamura) hinted on Wednesday that he hopes to continue to gradually raise interest rates as the Bank of Japan seeks further normalization of monetary policy after raising interest rates for the first time since 2007.

Addressing local business leaders in Aomori in northeastern Japan on Wednesday, Tamura said:

“From now on, the handling of monetary policy is very important. It is necessary to make slow but steady progress in the normalization process in order to reverse the unusually large-scale monetary easing policies of the past.”

However, the yen fell somewhat after Tamura's speech, because he reiterated a statement in the Bank of Japan's latest policy statement that, considering the prospects for inflation, the current financial environment will remain relaxed.

Tamura is a hawkish leader among the nine board members of the Bank of Japan. He was the first member to speak publicly after the Bank of Japan ended negative interest rates on March 19. He also emphasized the role of interest rates in the economy, implying that the Bank of Japan's work to raise interest rates is not over yet.

Tamura, a former executive of Sumitomo Mitsui Financial Group (Sumitomo Mitsui Financial Group), said the “ultimate goal” is to raise interest rates to restore their function as an adjustment to demand and within the central bank's 2% inflation target.

Tamura did not give a clear hint about the next normalization measures. Most BOJ observers expect the bank to raise interest rates again in October.

Some economists believe that considering Tamura's past performance, his remarks are a leading indicator of the Bank of Japan's policy thinking. In August of last year, Tamura said that the Bank of Japan may achieve its long-term goal of reaching 2% inflation by the beginning of 2024. This has led people to speculate that the Bank of Japan may raise interest rates earlier than many predicted at the time.

He also called for the need for an extensive policy review in December 2022, which Bank of Japan Governor Kazuo Ueda finally announced in April last year. As can be seen, Tamura's views are quite instructive.

Editor/Jeffy