BoJ’s Deputy governor warns yen moves now carry bigger inflation punch than in the past
The FX comments are the most market-relevant element of Himino's remarks and land with particular force given Thursday's USD/JPY spike to 161.80. By explicitly stating that yen moves carry a larger inflation impact than in the past due to shifts in corporate behaviour, Himino has effectively connected the FX rate to the BoJ's policy calculus in a way that goes beyond the standard disclaimer that monetary policy does not target exchange rates. That framing gives the BoJ implicit cover to accelerate the hiking path if yen weakness persists, without formally adopting an FX mandate. The underlying inflation deviation risk comment reinforces the April minutes' hawkish undercurrent and keeps the next hike firmly in view.
--- BoJ Deputy Governor Himino said the bank expects to keep raising rates, flagged risk of underlying inflation deviating from target, and warned FX moves now have a larger inflation impact than historically.
Summary:
- The BoJ expects to continue raising rates in line with economic, price and financial developments, with pace and timing to be guided by the likelihood of the baseline scenario materialising and associated risks
- Underlying inflation is approaching 2% but carries risk of deviating upward, with Himino cautioning that recent price rises are not driven solely by temporary supply factors
- Japan's economy is solid overall, supported by high corporate profits and household income, despite the drag from elevated oil prices
- FX moves are among the key factors affecting Japan's economy and prices; while monetary policy does not target exchange rates, Himino said the inflation impact of FX moves has grown due to changes in corporate behaviour
- The BoJ will continue to monitor FX developments carefully given their potential effect on inflation expectations and underlying inflation
Bank of Japan Deputy Governor Himino used a Friday appearance to reinforce the bank's hiking bias while delivering a pointed message on the yen that markets would have been unwise to miss.
The core message on rates was consistent with post-June meeting guidance: the BoJ expects to keep raising, with pace and timing calibrated against the evolving baseline and its associated risks. Himino added texture by flagging that underlying inflation is approaching 2% but that the risk of it deviating from target runs to the upside, not because of a temporary energy spike but because of something more durable in the price-setting environment. That distinction matters. It echoes the April minutes' concern that Japan's shift away from a deflationary mindset has made the economy more responsive to cost pressures than in previous cycles.
The more immediately traded element was his commentary on foreign exchange. Himino was careful to restate the standard BoJ position that monetary policy does not target FX moves. He then qualified it in a way that carries real weight: compared with the past, yen weakness now has a larger impact on inflation due to changes in corporate behaviour. The implication is that a sustained depreciation feeds through to prices faster and more broadly than historical models would suggest, which in turn affects inflation expectations and the underlying inflation trajectory the BoJ is trying to manage.
Coming on the same day that USD/JPY tested 161.80 before a sharp reversal, Himino's remarks land as more than routine communication. The BoJ is watching the yen, it is not indifferent to where it goes, and the policy rate is the instrument that connects the two.
This article was written by Eamonn Sheridan at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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