BoJ Deputy Governor Himino says believe the BoJ should continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with developments in economic activity, prices and financial conditions

Says: Must be mindful of upside price risk more than ever before. Accomodative monetary condition will be positive for the economy. Rising global AI demand will push up both economic activity and prices. Weak Yen helps push up inflation. Important to stabilise underlying inflation at around 2%. BoJ will debate policy at every meeting while taking such risks into account. If underlying inflation rises to a level above the 2% price target, it would have an adverse impact on the economy. Policymakers must consider various factors when guiding policy. BoJ should pay more attention to upside risks to prices than in the past. Main factor guiding policy is not underlying economic conditions but the outlook and risks. It will take some time for monetary policy to affect prices. Effective use of monetary policy can prevent the economy from deviating from a path towards sound development. Biggest challenge in communication relates to the issue of time horizons. As financial conditions remain accommodative, BoJ needs to ease off the accelerator in a timely fashion and continue raising the policy rate. Monitoring current conditions is fundamental to assessing the outlook and risks, but policy debate tends to place greater weight on the future outlook and risks. In easing off the accelerator and raising rates, BoJ must carefully assess conditions ahead, taking forecasts and other information into account. Focusing only on immediate reactions may risk losing sight of the broader implications of a policy change. Risk of the economy facing a severe downturn has diminished. Weak Yen boosts global firms' profits but weighs on household real income. BoJ wants to scrutinise the various effects of a weak Yen on the economy. Core role of BoJ is to ensure everyone can use the Yen as a currency confidently and efficiently. Monetary policy is not aimed at controlling FX rates, but FX moves are among the key factors affecting the economy and prices. BoJ must be mindful that FX moves could affect underlying inflation through changes in inflation expectations. Real interest rates are negative across the short- to medium-term zone. Japan's financial conditions remain accommodative and continue to support the economy. Desirable to avoid a situation where delaying a rate hike leads to sharp inflation and requires rapid rate increases thereafter.