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By Leika Kihara <\/p>\n
TOKYO, July 2 (Reuters) – The Bank of Japan should continue to raise interest rates at \u200ca moderate pace to rectify excessive yen declines, \u200cToshihiro Nagahama, a government panel member known as an economic aide to dovish \u200bPrime Minister Sanae Takaichi, said on Thursday. <\/p>\n
Nagahama said he sees Japan’s nominal neutral rate, or the level that neither cools nor overheats growth, at around 1.5%. <\/p>\n
The BOJ should thus raise \u200cits policy rate, \u2060currently at 1%, two more times at a pace of once every six months, he told \u2060a news briefing hosted by the Foreign Press Center Japan (FPCJ). <\/p>\n
“Moderate BOJ rate hikes are important in rectifying excessive yen weakness,” \u200bNagahama said, \u200badding that the BOJ’s \u200bdecision to raise rates in \u200cJune was an appropriate move. <\/p>\n
Delaying BOJ rate hikes could also heighten inflation expectations and push up long-term interest rates, he added. <\/p>\n
Hand-picked by Takaichi as one of the private-sector members of the government’s top economic council, Nagahama is considered as \u200cbeing among advocates of loose \u200bfiscal and monetary policy. <\/p>\n
His comments endorsing \u200bmoderate BOJ rate hikes \u200bunderscore the concern the administration and Takaichi’s \u200creflationist aides have about the economic \u200bpain inflicted \u200bby the yen’s declines. <\/p>\n
The BOJ is expected to raise interest rates by year-end and again around summer next \u200byear, before pausing \u200cfor a while, said Nagahama, who is also chief \u200beconomist at Dai-ichi Life Research Institute. <\/p>\n
(Reporting by Leika \u200bKihara; Editing by Christian Schmollinger) <\/p>\n<\/p><\/div>\n