The Bank of Japan could raise interest rates sooner than many currently expect, a former official said. The bank needs to be better at predicting these moves to avoid panicking markets.
“Rate hikes could be faster than anyone expects,” said Tsutomu Watanabe, the former government official and economics professor at the University of Tokyo. “Two more steps this year are possible,” he said.
Watanabe, one of Japan’s top inflation experts, said there was a discrepancy between the BOJ’s reasoning for the July 31 hike and price developments at the time, suggesting the authorities intended to raise rates to create a buffer against potential economic headwinds and to normalize the situation as quickly as possible.
