Junko Koeda, a member of the Bank of Japan (BOJ) Policy Board, called for further interest rate increases, saying widespread price gains suggest underlying inflation is taking hold near the bank’s 2% target.
In her Oct. 15 speech in Kumamoto, Koeda said prices were higher than a year earlier for more than 70% of the more than 500 goods and services in Japan’s consumer price index. She said steady wage gains also supported her assessment that inflation was becoming more durable.
Koeda pointed to Japan’s reliance on imported energy and food as one way higher import costs reach consumers. A weaker yen, companies passing on costs and global demand tied to artificial intelligence could add to price pressure, she said. She also recalled that major external shocks had previously weakened domestic demand and inflation.
Koeda urged timely rate adjustments while asking officials to watch how earlier increases affect households, including borrowers with variable-rate mortgages. She did not put a figure on those households’ costs.
The BOJ voted 7-2 on Sept. 18 to raise its overnight rate target to around 1.25%. The change took effect Sept. 24, and Koeda supported it. In the bank’s July outlook, the medians of Policy Board members’ forecasts for consumer price inflation excluding fresh food were 2.5% in fiscal 2026 and 2.4% in fiscal 2027.
Four unnamed sources told Reuters they expected an October rate hold unless the yen resumed falling enough to raise import costs and feed broader inflation. They said another increase could come as soon as December, presenting it as a possibility rather than a decision.
The BOJ is scheduled to announce its next policy decision and outlook Oct. 30, following its Oct. 29-30 meeting.
