Bank of Japan board member Asada demands demand-driven inflation before backing further hikes, keeping an October-December timeline in play.
Bank of Japan board member Toichiro Asada stated he will support another rate hike only if inflation is driven by demand, not just cost pass-through. His comments left the market’s base case for an October-December move intact, as he avoided committing to a near-term timeline.
Asada, the sole dissenter against June’s rate increase, highlighted rapid cost pass-through as a risk, suggesting underlying price pressures persist despite moderating headline inflation. He also described Japan’s neutral rate as low but difficult to quantify precisely, reinforcing caution on policy shifts.
Traders noted his emphasis on reducing the BOJ’s bond holdings relative to GDP, signaling balance sheet policy remains a separate tool from rate adjustments. His call for fiscal-monetary coordination underscored concerns about the limits of monetary policy alone.