Former Deputy Governor of Bank of Japan, Toshihiko Fukui: Need to be cautious of the risk of inflation rising and there is still room for further interest rate hikes.

Former Deputy Governor of the Bank of Japan, Kazuo Kimura, stated that the Bank of Japan must be cautious of the risk of rising inflation and that there is still room for further interest rate hikes. Kimura said in a speech in Frankfurt, Germany on Tuesday that strong wage growth, increased ability of businesses to pass on costs, and rising inflation expectations indicate that Japan's inflationary pressures may be stronger than currently believed by policymakers. "Japanese policymakers need to remain vigilant and avoid monetary policy lagging behind the situation," said Kimura, who is currently the Chief Research Officer at Daiwa Institute of Research. Real interest rates are still negative, and "raising interest rates a few more times will not substantially change Japan's loose monetary environment."