Former BOJ Official Says Terminal Rate Could Exceed 2% by Year-End

According to Jin10, on Wednesday, former Bank of Japan official Watanabe Tsutomu said the central bank may accelerate rate hikes later this year and eventually raise its benchmark rate above 2% to contain inflation. Watanabe stated that the terminal rate will be around 2% or slightly higher than current expectations. He noted that policy should be considered dynamically rather than statically, with the terminal rate depending not only on neutral rate calculations but also factors including inflation overshoot before the BOJ clarifies its tightening stance. As core inflation approaches the 2% target, the central bank may shift to a more proactive position to prevent price growth from overshooting.
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