Former BOJ official Watanabe Tsutomu said on Wednesday the BOJ could accelerate
rate hikes later this year and lift its policy rate above 2% to rein in
inflation. He said the terminal peak will likely be higher than most expect,
around 2% or slightly above. Watanabe urged a dynamic assessment of policy,
saying the terminal rate depends not only on neutral-rate estimates but also on
factors such as inflation overshooting before the BOJ clearly tightens. With
core inflation approaching the 2% target, he warned the policy board may shift
from a previously passive stance to a more proactive position to prevent an
overshoot.
