Watanabe: BOJ rate hike likely in October at earliest

The Bank of Japan will not be in a rush to raise interest rates again and will likely make the next move in October at the earliest, said Tsutomu Watanabe, a former BOJ official known as one of the country’s leading inflation experts. “I don’t think the next move will come so soon. The BOJ will probably adjust its policy by looking at the data and will not act irrationally,” Tsutomu Watanabe, a professor of economics at the University of Tokyo, said on Friday. Watanabe, who was a potential candidate to become BOJ governor when the position opened last year, contrasts with the views of some BOJ watchers who have pointed to the risk that the BOJ could move quickly as the yen approaches a 34-year low. This is due to the spread between U.S. and Japanese rates. The professor expects the bank to take some time to gauge inflation trends as the current price trend is not very strong. Watanabe said the BOJ’s decision last month to end the world’s last negative interest rate didn’t appear to be an evidence-based policy move, with services prices remaining somewhat lackluster and a key data point in the form of inflation figures just days after the March 18-19 meeting. “There must be some important reasons to rush,” Watanabe said, adding that a weak yen was unlikely to be the catalyst and the bank could send hawkish signals to quell pressure on the yen if it wanted to.