Bank of Japan (BOJ) Policy Board member ASADA Toichiro urged a measured approach to further rate increases, saying household demand remains too weak to lead growth while inflation is near the bank’s 2% target.
Speaking to local leaders in Nagasaki on Nov. 12, ASADA said the policy rate reached 1.25% after increases in June and September. It was the first time in about three decades the rate had reached that level. He opposed both increases and supported holding rates steady in July and October. He placed the current rate within the BOJ’s broad neutral-rate estimate, from a little above 1% to 2.5%.
ASADA said it may take at least a year to judge how rate hikes affect economic activity. He warned that another increase could weigh on activity and called for monitoring companies’ financing conditions and household loans. The BOJ meeting minutes also recorded his opposition to the September increase.
Employment and income conditions had improved moderately, and spending had held up, but household consumption was not strong enough to lead growth, ASADA said. Consumer price index (CPI) inflation excluding fresh food was around 2%, while a measure that also excluded energy was about 2.5%. He said recent price gains were not necessarily driven by demand.
The BOJ’s outlook projects the year-on-year CPI increase to move clearly above 2% in the second half of fiscal 2026, partly reflecting energy costs, global demand for AI-related goods and yen depreciation. The increase is expected to ease toward 2% later in the forecast period. ASADA said the pace of wage-led demand inflation should inform decisions on further rate increases.
His remarks focused on whether wage gains are translating into stronger demand as the BOJ assesses the durability of inflation. The bank’s next monetary policy meeting is scheduled for Dec. 17-18, 2026.
