Bank of Japan board member Toichiro Asada called for due consideration of the pace of further interest rate rises in a speech to local leaders in Nagasaki on 12 November. Asada voted against both of this year's increases, in June and September, which took the policy rate to 1.25%, the highest in around three decades.
The Bank estimates Japan's neutral nominal rate at slightly above 1% to 2.5%, which puts the current 1.25% inside that range, and Asada warned that rate rises "are now becoming more likely to have a larger impact on real economic activity than when the Bank began to raise the policy rate".
CONSUMPTION IS THE WEAK POINT
Consumption is his central concern, according to investingLive. The Bank describes private spending as resilient, but Asada said it has been more or less flat and is not strong enough to drive overall growth. "I believe that the recent price increases have not necessarily been driven by demand factors," he said.
He said a further rise would most likely come when higher wages spur demand-driven inflation. Bank lending rates and corporate borrowing costs have risen, he noted, and the full effect of a rate rise can take "one year or more" to become clear, so "it is necessary for the Bank to give due consideration to the pace of any policy rate hikes".
STRENGTH ELSEWHERE
Asada acknowledged strength elsewhere. Corporate profits are high, helped by global AI-related demand, unemployment is around 2.5%, base pay rises have held up for a third year and real wages have been positive since the start of 2026. Core consumer inflation is around 2%, held down by government energy subsidies, while a measure that excludes such institutional factors is running at 3% to 3.5%.
October producer price inflation accelerated to 7.1% from 6.8%, above expectations of 6.5%, ActionForex reported. Finance ministry officials were also warning against rapid moves in the yen, with the dollar near 160 yen.
THE DECEMBER MEETING
The speech does not say explicitly how Asada will vote in December. The Policy Board's next meeting is on 17 and 18 December, according to ActionForex and the Bank's meeting schedule.
Before then, Governor Kazuo Ueda is due to speak to business leaders in Nagoya on 30 November, according to the Bank's website.
THE TGB VIEW
Japan's three global systemically important banks rank high in the TGB Bank Rankings by total assets: Mitsubishi UFJ Financial Group is 10th with US$2,704.6bn, Sumitomo Mitsui Financial Group 17th and Mizuho Financial Group 19th, with returns on equity of 10.9%, 10.0% and 11.0% in their March 2026 company reports. The TGB market profile for Japan counts ¥1,506.0tn of assets at domestically licensed banks at end-August 2026, the balance sheet on which Asada says lending rates and corporate borrowing costs have risen. The next policy meeting, on 17 and 18 December, is where his call to weigh the pace of rises from 1.25% is tested.
Related: Bank of Japan minutes show board backing more rate rises after its move to 1.25%
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