Former Bank of Japan economist: US-Iran peace agreement will not change Bank of Japan's interest rate hike plan

Odaily Odaily reports that former Bank of Japan chief economist Seisaku Kameda said on Monday that the US-Iran peace agreement is unlikely to change the Bank of Japan's expectation of two interest rate hikes this year. With inflationary pressures mounting, the Bank of Japan is expected to raise its short-term policy rate from 0.75% to 1% on Tuesday. Kameda stated that this would have been done in April had the Middle East war not broken out. He added that if the peace agreement leads to the smooth reopening of the Strait of Hormuz, it may alleviate some of the pressure on the Bank of Japan to raise interest rates faster than expected to curb inflation. “But this will not change the Bank of Japan’s plan to raise real borrowing costs, which are still low, and normalize monetary policy by raising interest rates about twice a year,” said Seisaku Kameda. He pointed out that after the June rate hike, the Bank of Japan is likely to raise rates again in October or December. In addition, Bank of Japan Governor Kazuo Ueda will miss the June meeting due to hospital treatment for an infectious liver cyst. Deputy Governor Shinichi Uchida will preside over the press conference in his place. Seisaku Kameda stated that Uchida is expected to reiterate the Bank of Japan's determination to continue raising interest rates, but given the continued uncertainty surrounding the situation in the Middle East, he will avoid giving a clear indication of the timing of the next rate hike. (Jinshi)