BOJ Deputy Governor Vows to Keep Raising Interest Rates

Bank of Japan (BOJ) deputy governor Shinichi Uchida said the central bank can proceed with interest rate hikes at a pace in line with market expectations, keeping alive views that there is a chance of a near-term increase in borrowing costs.

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SHIZUOKA - Bank of Japan (BOJ) deputy governor Shinichi Uchida said the central bank can proceed with interest rate hikes at a pace in line with market expectations, keeping alive views that there is a chance of a near-term increase in borrowing costs.

But he offered few clues on when and how far the central bank could raise rates, stressing the difficulty of estimating where Japan's neutral rate of interest - the level that neither cools nor overheats the economy - could be.

"In practice, (the neutral rate level) is something we will know while examining how the economy and prices respond to our interest rate hikes," Mr Uchida said in a speech to business leaders in Shizuoka on March 5.

"If it's at a pace in line with expectations, it will be possible for us to proceed with rate hikes while examining how the economy responds," he said.

Markets are roughly pricing in the chance of a hike in the BOJ's policy rate to 0.75 per cent from the current 0.5 per cent around July, followed by another increase to 1 per cent early 2026, according to a chart attached to the text of Mr Uchida's speech posted on the BOJ's website.

Mr Uchida warned of the need for vigilance due to strong uncertainty over the global economic outlook due in part to US President Donald Trump's policies and geopolitical tensions.