TAMURA said raising the Bank of Japan’s policy rate to a neutral level of about
2% is essential to avoid being forced into larger hikes later. He prefers
incremental rate increases every few months to approach the 2% neutral rate, but
said the BOJ should not hesitate to accelerate or deliver larger moves if upside
price risks rise. He judged potential inf has reached 2% and that upside price
risks persist regardless of Middle East developments. TAMURA said Japan differs
from the Fed and ECB because the BOJ’s policy rate remains below neutral and
inflation expectations are not yet well anchored. He opposed pausing tapering of
bond purchases next fiscal year and urged rapid normalization of the BOJ’s bond
holdings.
