BoJ Board Member Koeda says she believes that the bank should adjust the policy interest rate in a timely manner with an eye on the economic and price situation, while keeping in mind the estimated range of the neutral interest rate

Says: Given that there have been considerable upside risks to prices in addition to continued accommodative and financial conditions, the bank should not become overly cautious about raising the policy interest rate. Believes it will be necessary to pay attention to both AI-related exports and imports. Recent interest rate increases are not necessarily expected to reduce overall consumption of the working generation. Still would like to examine the accumulated impact of policy interest rate hikes on household behaviour. Firms' funding conditions have remained favourable on the whole. Believe the neutral interest rate is considerably above 1%, which is roughly the lower bound of the estimated range. Impact on long-term interest rates from changes in central bank holdings of government bonds may be smaller during the reduction phase than during the active expansionary phase. Over the past year or so, have argued that underlying inflation has been around 2% on the whole. Continued price increases across a wide range of CPI items and a shift in the price-change distribution seem to suggest that underlying inflation is becoming anchored at around 2%. BoJ should adjust policy interest rate in a timely manner with an eye on economic and price situation while keeping in mind estimated range of the neutral interest rate. Vital for the BOJ to proceed steadily with normalisation of its balance sheet.