BOJ's Takata urges nimble rate hikes to counter inflation pressures

TOKYO, Sept 2 (Reuters) - The ‌Bank of ​Japan ​should conduct interest rate hikes nimbly in response to inflationary pressures, rather than at a ‌fixed semiannual pace, hawkish board member Hajime Takata said ⁠on Wednesday.

Rather than semiannual rate hikes previously anticipated by markets, 2026 ‌represents a regime change, ‌with future hikes becoming more nimble and data-dependent, driven by domestic inflation and growth trends as well as ​overseas developments, Takata said in a speech to business leaders in Sapporo in northern Japan.

"I consider it ⁠necessary for the BOJ to shift from the current stance of encouraging a ​rise in underlying inflation and to demonstrate to the market its determination to prevent upward deviations ​in prices," he said.

He added ‌that the BOJ needs to carefully monitor the risk that the divergence of monetary policy ⁠stances between Japan and other countries could bring about high volatility in Japan's financial markets, particularly foreign exchange markets.

Takata was ⁠the sole dissenter to the BOJ's decision in July to keep short-term ​interest rates steady at 1%, calling for a rate hike to 1.25% to respond to inflationary risks from external demand shocks.

Sources ‌have told Reuters the BOJ is set to raise the rate as soon as at ‌its two-day policy meeting through September 18, and is ⁠considering hiking more aggressively thereafter ‌than the current ​pace of roughly two times a year.

(Reporting by Makiko Yamazaki; Editing by Tom Hogue and JAcqueline ‌Wong)

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