Bank of Japan deputy governor warns inflation could exceed 2% target

Deputy Governor Ryozo Himino told Japan's parliament that underlying inflation may rise above the Bank of Japan's 2% goal, warning that a delayed response could exacerbate price pressures. He highlighted that the recent policy‑rate hike to 1% – the highest in 31 years – may be followed by further increases if supply‑side shocks from a weak yen, higher oil prices linked to Middle‑East tensions, and rising import costs continue to feed consumer prices.

Himino noted that while headline CPI remained steady in May due to energy subsidies, service costs have risen and processed‑food prices are accelerating, suggesting broader inflationary momentum. The BOJ is set to review policy again in July, with markets expecting additional tightening.

The remarks underscore the BOJ's commitment to curb inflation even as strong corporate earnings, stable wages, and robust global demand, especially from AI‑driven sectors, support the Japanese economy.