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The Bank of Japan (BoJ) will need a lot more convincing its economy is truly on a path to sustained 2 per cent inflation before hiking interest rates again, according to ANZ Senior International Economist Tom Kenny.
Earlier in March, the BoJ put an end to seven years of negative interest rates by announcing its first hike since 2007. The bank lifted its key policy rate by 10 basis points to 0.0 per cent, making it the final central bank globally to exit negative rates.
Speaking on the 5 in 5 with ANZ podcast, Kenny said BoJ Governor Kazuo Ueda had made it clear Japan’s economy was “a long way, or some way” from consistently meeting the central bank’s price stability target.
“I think that the Bank of Japan would be looking to keep inflation going for some time before trying to hike,” he said.
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Kenny said the BoJ was conscious another hike was not an impossibility in the event of “a big upswing in prices”, but that “the risk of that event occurring was pretty low”.
Listen to the podcast to find out more.
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