By Leika Kihara
TOKYO (Reuters) -Bank of Japan board members turned overwhelmingly hawkish at their April policy meeting with many calling for the need to raise interest rates steadily to forestall risks of an inflation overshoot, a summary of opinions at the meeting showed.
The debate underscores BOJ Governor Kazuo Ueda’s recent remarks signalling the chance of multiple rate hikes ahead, and heightens the possibility of an increase in short-term borrowing costs in coming months.
One member said the BOJ should consider raising rates moderately, to avoid being forced to hike in a “discontinuous and rapid” way once its price target is sustainably met, according to the summary released on Thursday.
“The BOJ must raise interest rates in a timely and appropriate manner, as the likelihood of achieving its growth and price projections heightens,” another opinion showed.
At the April meeting, the BOJ kept interest rates near zero and produced fresh quarterly estimates that projected inflation to stay near 2% through early 2017, signalling its readiness to hike borrowing costs later this year.
One board member saw the chance of a faster-than-expected interest rate hike, the summary showed.
“If the outlook shown in our April quarterly report is realized, our 2% inflation target will be sustainably and stably achieved in about two years and the output gap will be positive. Therefore, there’s a chance our policy interest rate will be higher than the path currently priced in by the market,” the member was quoted as saying.
(Reporting by Leika Kihara; Editing by Himani Sarkar and Shri Navaratnam)
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