Bank of Japan board member says the 1 percent rate should rise into a 1.1 to 2.5 percent neutral range

A Bank of Japan Policy Board member said the country's 1 percent policy rate remains below the Bank's estimated neutral range and should rise further.

MASU Kazuyuki told local leaders in Fukui on Thursday that the nominal neutral range is 1.1 to 2.5 percent, derived from a natural rate estimate of minus 0.9 to plus 0.5 percent and the Bank's 2 percent inflation target. That is his position. It is not a new Board decision.

Masu said one-year to two-year real rates remain negative and underlying inflation, though still below 2 percent, is very close to the target. He said the Bank should keep raising rates while judging crude oil prices, AI-related demand and the yen. AI demand is lifting prices for semiconductors, production equipment, copper and power facilities, he said, while a slowdown in that demand would also hurt Japan's economy.