Asada urges restraint on further rate increases
Bank of Japan (BoJ) Policy Board member Asada Toichiro urged attention to the pace of further rate increases, citing subdued consumption. The policy rate reached 1.25 percent after increases in June and September 2026, both of which he opposed.
Rates enter the neutral range
Asada supported holding rates in July and October 2026.
He put the estimated neutral rate at slightly above 1 percent to 2.5 percent, placing the policy rate within that range.
The natural rate estimate spans slightly above minus 1 percent to plus 0.5 percent.
Rate increases can take a year or more to show their effects, he said.
Recent producer inflation was around 7 percent; consumer inflation excluding fresh food was around 2 percent, or 3.0-3.5 percent excluding institutional factors too.
Excluding fresh food and energy, inflation was around 2.5 percent.
Underlying inflation and inflation expectations were around 2 percent.
Unemployment was around 2.5 percent and scheduled earnings growth around 3 percent, but consumption was nearly flat in April-June 2026.
Faster sales and higher forecasts
The October 2026 decision raises annual ETF sales from ¥330 billion to ¥860 billion, or about 0.05 to 0.1 percent of market turnover.
Completion falls from 112 to about 43 years; adjustments and suspensions remain possible.
Sales began in January 2026 following the September 2025 decision.
October forecasts put fiscal 2026-2028 GDP growth at 0.7, 0.7 and 0.8 percent; inflation excluding fresh food at 2.5, 2.6 and 2.0 percent; and inflation excluding fresh food and energy at 2.4, 2.7 and 2.3 percent, respectively.
Demand before further tightening
Asada ties further increases to stronger wage-driven demand, rather than cost pressures alone.
He warns that past tightening can weaken activity and push underlying inflation down.
His position contrasts with the BoJ's stated case for continuing rate increases as conditions evolve.