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

Odaily Planet Daily 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 indicated that if the peace agreement facilitates the reopening of the Strait of Hormuz, it might 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 interest rates approximately twice a year to push up the still low real borrowing costs and normalize monetary policy," Kameda said. He pointed out that after the June rate hike, the Bank of Japan is likely to raise rates again in October or December. Furthermore, 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 on his behalf. Seisaku Kameda stated that Shinichi 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)