Former Bank of Japan economist: US-Iran peace agreement will not change the Bank of Japan's interest rate hike plans

Odaily Planet Daily News: Former Bank of Japan Chief Economist Seisaku Kameda stated on Monday that the peace agreement between the United States and Iran is unlikely to change the Bank of Japan's expectation of two rate hikes this year. As inflation pressures intensify, the Bank of Japan is expected to raise the short-term policy rate from 0.75% to 1% on Tuesday. Kameda said that if the Middle East war had not broken out, the rate hike should have occurred in April. He added that if the peace agreement facilitates the smooth reopening of the Strait of Hormuz, it could ease some of the pressure for the Bank of Japan to raise rates faster to curb inflation.

"But this will not change the Bank of Japan's pace of raising rates about twice a year to push up still-low real borrowing costs and normalize monetary policy," Kameda said. He pointed out that after the June rate hike, the Bank of Japan is likely to raise rates again in October or December.

Additionally, Bank of Japan Governor Ueda Kazuo will be absent from the June meeting due to treatment for infectious hepatic cysts at the hospital. Deputy Governor Uchida Shunichi will preside over the press conference. Kameda said Uchida is expected to reaffirm the Bank of Japan's determination to continue raising rates, but given the ongoing uncertainty in the Middle East situation, he will avoid giving a clear hint about the timing of the next rate hike. (Jin10)