A former Bank of Japan board member stated that the central bank may raise its benchmark interest rate this month to avoid falling behind in managing inflation. "From the Bank of Japan's perspective, I would say now is the time to act," Masaaki Kabeizuka said in an interview on Wednesday. "War is making the economic environment inflationary, and if inflation expectations truly begin to surge, the risk of falling behind the curve increases." Following news of a temporary ceasefire in the Iran conflict, oil prices fell, and global financial markets experienced a relief rally. However, oil prices appear likely to remain elevated, continuing to pressure various costs across the economy. Bank of Japan watchers are monitoring whether Governor Kazuo Ueda will send clear signals about potential policy outcomes before the April 28 policy decision announcement, similar to the signals provided before the rate hike in December. Kabeizuka, who left the Bank of Japan in 2024, indicated that recent economic indicators released by the central bank suggest its intention to raise rates. He added that, despite Middle East tensions and the spike in oil prices, the bank did not downgrade its regional economic assessment earlier this week.
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