Former Bank of Japan policy board member: Due to increasing price pressures, the central bank may raise interest rates before July.

Odaily Odaily reports that Seiji Adachi, a former member of the Bank of Japan's Policy Board, said on Tuesday that the Bank of Japan is likely to raise interest rates before July because the Middle East war has caused oil costs to surge, increasing the risk that the central bank will lag behind the curve in dealing with rising inflationary pressures. Adachi stated that the underlying inflation rate has reached the central bank's 2% target, and last week's Tankan survey showed that companies' five-year inflation expectations reached 2.5%. He said that the surge in oil prices and supply constraints caused by the war in Iran provide further justification for the central bank to raise its short-term policy rate from the current 0.75% soon. He stated, "The Bank of Japan would be better off raising interest rates to a level neutral to the economy as soon as possible," adding that Japan's neutral interest rate is likely around 1.25%. However, Adachi said that the possibility of a rate hike in April is "50%" because the war in Iran keeps markets volatile and obscures Japan's fragile economic outlook. (Jinshi)