Former Bank of Japan Economist: US-Iran Peace Agreement Unlikely to Alter BOJ's Rate Hike Plans

Odaily Planet Daily News  Seisaku Kameda, former chief economist of the Bank of Japan (BOJ), stated on Monday that a peace agreement between the US and Iran is unlikely to change expectations for the BOJ to raise interest rates twice this year. Amidst growing inflation pressures, the BOJ is expected to raise its short-term policy rate from 0.75% to 1% on Tuesday. Kameda indicated that, had it not been for the outbreak of war in the Middle East, the rate hike would have occurred in April. He noted that if a peace agreement leads to the smooth reopening of the Strait of Hormuz, it could alleviate some pressure on the BOJ to accelerate its pace of rate hikes beyond expectations in order to curb inflation.

"But this will not alter the BOJ's plan to push up still-low real borrowing costs and normalize its monetary policy by raising interest rates roughly twice a year," Kameda said. He pointed out that after the June rate hike, the BOJ is likely to raise rates again in either October or December.

Furthermore, BOJ Governor Kazuo Ueda will miss the June meeting due to receiving treatment for an infected liver cyst in hospital. Deputy Governor Shinichi Uchida will preside over the press conference instead. Kameda stated that Uchida is expected to reiterate the BOJ's resolve to continue raising rates, but, given the ongoing uncertainty in the Middle East situation, he will avoid giving a clear hint regarding the timing of the next rate hike. (Jin Shi)