By Leika Kihara
Tokyo, July 22 (Reuters) – The Bank of Japan remains on alert to upside inflation risks that could lead to faster interest rate hikes than markets project, said three sources familiar with its thinking.
Many central bank policymakers believe the pace and timing of rate hikes cannot be pre-scheduled and they depend much on economic and price developments at the time, they said.
But some within the BOJ see scope to raise rates at a faster pace than the dominant market view of twice a year, if price pressures from a weak yen and rising fuel costs from the U.S.-Israeli war on Iran push up inflation at a faster-than-expected pace, the sources said.
The sources spoke on the condition of anonymity as they were not authorised to speak publicly.
Bloomberg News reported earlier on Wednesday that BOJ officials are open to raising interest rates at a faster rate than the consensus among economists, with the yen’s continued weakness adding to upside inflation risks.
The report pushed up the yen and bond yields.
(Reporting by Gnaneshwar Rajan in Bengaluru; Editing by Muralikumar Anantharaman and Thomas Derpinghaus)
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