A former Japanese Ministry of Finance official said that the Bank of Japan should raise the benchmark interest rate at every interest rate meeting, aiming to raise interest rates above 2%, so as to reduce the interest rate spread with the US and ease the pressure on the yen. “Even though Japan has raised the policy interest rate to 1%, the real interest rate is still negative, while the real interest rate in all other countries is positive.” Takehiko Nakao, who stepped down as Deputy Minister of International Affairs at the Ministry of Finance in March 2013, said on a Tokyo TV program on Monday. Takehiko Nakao added that considering the level of inflation of around 2%, it is not unusual for Japan's policy interest rate to rise to 2.25% or 2.5%. Just as traders are closely watching the timing and pace of the Bank of Japan's subsequent interest rate hikes, he made the above remarks. The Bank of Japan kept the policy interest rate unchanged at 1.00% in July. Governor Ueda Kazuo indicated at a press conference after the resolution that there is an upward risk of inflation, reserving the possibility of interest rate hikes as early as September. People familiar with the matter revealed that the government led by Prime Minister Sanae Takaichi also supports recent interest rate hikes. As of Monday afternoon in Tokyo, overnight index swap data showed that the probability that traders would raise interest rates at the Bank of Japan's September 18 monetary policy meeting was 79%.

A former Japanese Ministry of Finance official said that the Bank of Japan should raise the benchmark interest rate at every interest rate meeting, aiming to raise interest rates above 2%, so as to reduce the interest rate spread with the US and ease the pressure on the yen. “Even though Japan has raised the policy interest rate to 1%, the real interest rate is still negative, while the real interest rate in all other countries is positive.” Takehiko Nakao, who stepped down as Deputy Minister of International Affairs at the Ministry of Finance in March 2013, said on a Tokyo TV program on Monday. Takehiko Nakao added that considering the level of inflation of around 2%, it is not unusual for Japan's policy interest rate to rise to 2.25% or 2.5%. Just as traders are closely watching the timing and pace of the Bank of Japan's subsequent interest rate hikes, he made the above remarks. The Bank of Japan kept the policy interest rate unchanged at 1.00% in July. Governor Ueda Kazuo indicated at a press conference after the resolution that there is an upward risk of inflation, reserving the possibility of interest rate hikes as early as September. People familiar with the matter revealed that the government led by Prime Minister Sanae Takaichi also supports recent interest rate hikes. As of Monday afternoon in Tokyo, overnight index swap data showed that the probability that traders would raise interest rates at the Bank of Japan's September 18 monetary policy meeting was 79%.