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

Odaily Planet Daily News  Seisaku Kameda, former chief economist of the Bank of Japan, stated on Monday that a peace agreement between the United States and Iran is not expected to change the bank's outlook for two interest rate hikes this year. Amid increasing inflationary pressures, the BOJ is expected to raise its short-term policy rate from 0.75% to 1% on Tuesday. Kameda noted that without the outbreak of war in the Middle East, the hike would have taken place in April. He suggested that if a peace deal facilitates the smooth reopening of the Strait of Hormuz, it could alleviate some of the pressure for the BOJ to accelerate its pace of rate hikes beyond expectations to curb inflation.

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

Additionally, BOJ Governor Kazuo Ueda will miss the June meeting due to hospital treatment for an infected liver cyst. 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 lingering uncertainties surrounding the situation in the Middle East, he will avoid giving clear hints about the timing of the next hike. (Jin Shi)