BOJ board member Masu calls for timely interest rate hikes

Bank of Japan board member Kazuyuki Masu advocated for timely interest rate hikes during a speech to business leaders in Matsuyama, Japan, on February 6, 2026, to prevent underlying inflation from exceeding the central bank's 2% target. Masu emphasized that further policy normalization is essential as Japanese households and corporations begin to abandon long-standing deflationary mindsets. He specifically noted that while underlying inflation is currently just below the target threshold, it is drawing very close due to rising food prices, a weakened yen, and sustained wage growth. The remarks from Masu, a former trade house executive, signal a growing hawkish consensus within the nine-member board after the BOJ previously raised the short-term policy rate to 0.75% in December. The policymaker highlighted that the central bank must remain vigilant regarding the yen's depreciation, as it amplifies the cost of imports and could potentially drive inflation expectations higher. Despite this hawkish leaning, Masu clarified that there is no fixed schedule for future adjustments, stressing that the pace of past moves would not serve as a definitive guide for upcoming decisions. Financial markets are currently pricing in a 60% probability of another rate hike as early as April, reflecting expectations that the BOJ will continue to move away from its ultra-loose monetary stance. However, Masu balanced his outlook by warning that the central bank must not disrupt the fragile "virtuous cycle" of moderate price and wage increases with excessively aggressive tightening. This cautious approach aims to navigate the transition into a stable inflationary environment without stalling domestic economic momentum. Meanwhile, core consumer inflation has remained stubbornly above 2% for nearly four years, further underscoring the pressure on the BOJ to act.