Asahi Noguchi, a member of the BOJ board, emphasized the significance of rising interest rates gradually and methodically. A slow pace guarantees that the economy adapts without creating unneeded shocks.
Raising rates too soon could impede the momentum of wage increases and make the 2% inflation objective even more unachievable. Quick decisions could harm consumers and businesses, making it more difficult to maintain economic growth.
Conversely, if rate increases are too slow, they may destabilise economic activity and prices. Noguchi highlighted the need to carefully balance growth and inflation to avoid unintended economic disruptions.
Although price stability is the primary objective, changes in asset prices and currency rates also have an impact. A weaker yen, for instance, might increase imports and exports, affecting price levels and economic activity.
To ascertain how policy changes impact the economy, the BOJ will keep an eye on all economic channels. In order to ensure steady growth and prices, the policy rate will be utilized as a flexible instrument to modify monetary accommodation.
