TOKYO, May 26 (Reuters) – Bank of Japan Deputy Governor Ryozo Himino said on Tuesday the central bank will consider the timing and pace of interest rate hikes while monitoring how developments in the Middle East affect the nation’s economy and prices.
“It’s important to maintain market confidence that inflation will be properly controlled by adjusting the degree of monetary easing at an appropriate pace in line with economic, price and financial conditions going forward,” Himino told parliament, in response to a question about recent rises in bond yields.
The benchmark 10-year Japanese government bond yield touched 2.8% last week, a level last seen in October 1996, amid concerns about rising global inflation and Japan’s fiscal expansion.
Himino said the BOJ expects to continue raising policy rates in line with economic, price and financial conditions, “given that real interest rates remain at very low levels.”
“But the timing and pace of such adjustments will be carefully considered by analysing how developments in the Middle East affect Japan’s economy and prices, and by assessing the likelihood of our baseline scenario being realised as well as the associated risks,” he added.
(Reporting by Makiko Yamazaki; Editing by Sonali Paul and Shri Navaratnam)
