Dovish BOJ policymaker Asada pushes back against early rate hike calls
FILE PHOTO: The Bank of Japan’s (BOJ) new board member Toichiro Asada attends his inaugural press conference at BOJ headquarters in Tokyo, Japan, April 1, 2026. REUTERS/Issei Kato/File Photo
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NAGASAKI, Japan, Nov 12 : Dovish Bank of Japan policymaker Toichiro Asada pushed back against calls within the board for a near-term interest rate hike, arguing on Thursday that moving prematurely could hurt growth and push down underlying inflation.
Asada, who dissented on the BOJ’s decisions to raise interest rates in June and September, noted the economy was growing moderately and underlying inflation was moving around the BOJ’s 2 per cent target but said recent data showed consumption was lacking momentum.
The comments highlight a rift within the policy-setting board that may complicate Governor Kazuo Ueda’s job in garnering consensus on the pace of future rate hikes.
“I believe the recent price increases have not necessarily been driven by demand factors,” Asada said in a speech to business leaders in the southern city of Nagasaki.
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“In this sense, I consider it necessary for the Bank to give due consideration to the pace of any policy rate hikes,” he said, stressing the need to avoid cooling growth by moving too quickly on rates.
While the BOJ kept rates steady at a review last month, a summary of opinions at the meeting showed some policymakers favoured hiking borrowing costs at a faster pace to combat mounting price pressures.
Analysts polled by Reuters expect the BOJ to raise its policy rate to 1.5 per cent in December and stick to a quarterly pace of hikes. Most of them view the terminal rate as 1.75 per cent or 2 per cent.
INCREASED RISK RATE HIKES WILL COOL GROWTH
In the speech, Asada said the risk of rate hikes cooling growth will become larger now that the BOJ’s policy rate has entered the 1.1 per cent-2.5 per cent range its staff estimate as being Japan’s neutral rate, a range where it is seen neither cooling nor overheating growth.
“While financial conditions remain accommodative, the degree of monetary support seems to be gradually diminishing,” he said, adding the impact of earlier rate hikes will likely be seen with a lag of at least a year.
Asada and fellow policy dove Ayano Sato, who also voted against the September rate rise, joined the policy board this year. They were both nominated by Prime Minister Sanae Takaichi, who in the past has warned against the BOJ’s rate-hike plans.
With stubbornly high energy costs and rising import prices from a weak yen adding to inflationary pressures, the BOJ raised rates in September to follow up a similar move in June — a shorter interval between increases than the rough pace of two moves a year seen over 2024 and 2025.
The BOJ kept policy steady at its review in October but declared victory in its 14-year battle to hit its price target and flagged upside price risks, reinforcing its hawkish bias.
Source: Reuters
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