Former Bank of Japan Policy Board Member: Due to increasing price pressures, the central bank may raise interest rates before July

Odaily News According to former Bank of Japan Policy Board member Seiji Adachi on Tuesday, the Bank of Japan is likely to raise interest rates before July, as the war in the Middle East has caused oil costs to surge, increasing the risk that the central bank will fall behind the curve in addressing growing inflationary pressures. Adachi stated that core inflation has already reached the central bank's 2% target, and last week's Tankan survey showed that corporate five-year inflation expectations have reached 2.5%. He noted that the oil price surge and supply constraints resulting from the Iran war provide further justification for the central bank to soon raise its short-term policy rate from the current 0.75%. He said, "It would be best for the Bank of Japan to raise interest rates to a level neutral for the economy as soon as possible," adding that Japan's neutral interest rate is likely around 1.25%. However, Adachi mentioned that the possibility of a rate hike in April is "50/50," as the Iran war keeps markets volatile and obscures Japan's fragile economic outlook. (Jin10)