Former Bank of Japan Policy Board member: Due to increased inflationary pressures, the central bank may raise interest rates before July.

ZkProver · 2026-04-07T06:16:10+00:00

Bank of Japan Policy Board Member Seiji Ando stated that the Bank of Japan may raise interest rates before July to address inflationary pressures caused by the Middle East conflict. He pointed out that core inflation has reached 2% and mentioned that the short-term survey shows a five-year inflation expectation of 2.5%. He recommended raising the short-term interest rate to around 1.25%, which is neutral for the economy, but assessed the likelihood of a rate hike in April at 50%.

ZkProver

2026-04-07 06:16:10

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ChainCatcher Message: On Tuesday, Masashi Ando, a former deliberation committee member of the Bank of Japan, said the central bank is very likely to raise interest rates before July because the Middle East war has pushed oil costs sharply higher, increasing the risk that the central bank will fall behind the curve in responding to rising inflation pressures. Ando said core inflation has already 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 the jump in oil prices and supply constraints caused by the Iran war give the central bank more reason to raise its short-term policy rate from its current 0.75% soon. He said, “The Bank of Japan should raise rates to a level that is neutral for the economy as soon as possible,” adding that Japan’s neutral rate might be around 1.25%. But Ando said the likelihood of a rate hike in April “is 50%,” because the Iran war keeps markets volatile and makes Japan’s fragile economic outlook unclear.

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