By Makiko Yamazaki and Miho Uranaka
TOKYO, Feb 12 (Reuters) – The Bank of Japan could raise key interest rates again as early as March and deliver up to three hikes this year in light of persistent inflation and yen weakness, Mizuho Financial Group’s markets chief told Reuters on Thursday.
With the yen having weakened and inflation continuing to run above the BOJ’s target, “we can expect as many as three rate hikes this year, and it’s entirely possible that the next one could come as early as March or April,” Kenya Koshimizu, co-head of the lender’s global markets division, said.
Koshimizu said there are many positive factors right now, including 3-4% nominal economic growth and a clearer policy strategy by Prime Minister Sanae Takaichi.
“The BOJ will adjust monetary policy in line with these improvements,” he added.
As concerns over global trade frictions eased, the BOJ raised its policy rate to a 30-year high of 0.75% in December and has signalled its readiness for further rate hikes.
A Reuters poll last month showed most economists expected the central bank to wait until July before moving again to gauge the impact of December’s quarter-point hike.
Asked about recent selloffs in government bonds, Koshimizu said current bond yields are justified.
“In an era of 3%-4% nominal economic growth, a 10-year yield in the 2% range isn’t particularly surprising. It could rise further without it being out of line,” he said.
After hitting a 27-year high of 2.38% in late January on worries over Japan’s fiscal health, the benchmark 10-year JGBs yield eased to around 2.2% on Thursday.
“I get the impression that the Takaichi administration, judging from its actions such as the draft budget, is in fact taking fiscal discipline into account,” Koshimizu said, adding that Japan’s flow-based fiscal balance is improving rapidly.
(Reporting by Makiko Yamazaki; Editing by Kim Coghill)
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