Former Bank of Japan board member: A June rate hike by the Bank of Japan is crucial, otherwise it will fall behind the inflation situation.

According to Odaily Odaily, Makoto Sakurai, who served as a council member of the Bank of Japan from 2016 to 2021, said that the Bank of Japan is likely to raise interest rates next month, and this meeting will determine whether policymakers can avoid falling behind in dealing with inflation. "They are very likely to raise interest rates this time," Makoto Sakurai said on Friday. "If they don't, their policy will fall behind the times. This meeting is extremely important." Sakurai stated that if officials do not act this time, they may miss a window for a rate hike and have to indefinitely postpone the next rate increase due to the continued high uncertainty caused by the conflict with Iran. Sakurai made these remarks as the yen hovered near the level where Japanese authorities intervened in the foreign exchange market last month to support the yen, increasing the risk that rising import costs will further push up inflation. Data released on Friday showed that Tokyo's inflation gauge, which is closely watched by the Bank of Japan, rose 1.3% year-on-year in May, slower than expected and the smallest increase in four years. This slowdown was mainly due to Tokyo's temporary water tariff reduction. Makoto Sakurai pointed out that Tokyo's inflation data was affected by technical factors and would not change the Bank of Japan's policy path; core inflation may accelerate again later this year. Sanae Takashi is considered a potential obstacle to interest rate hikes, and she has long supported loose monetary policy. Sakurai stated that after US Treasury Secretary Bessenter signaled broad support for further interest rate hikes during his visit to Japan earlier this month, Takashi may allow the Bank of Japan's policymakers to make their own judgment this time. (Jinshi)