BoJ board member Naoki Tamura, one of the central bank’s most hawkish policymakers, who voted for a 25bps hike at the September meeting, reiterated his call for a faster shift toward a neutral policy stance. In a speech today, he said the current stance remains “far away from the neutral interest rate” the impact of prior rate hikes on the domestic economy has been “extremely limited.” He warned that keeping policy too loose for too long could invite future instability.
Tamura explained that his dissent was based on “risks to prices being skewed to the upside”. He now sees it as “more likely that the price stability target will be achieved earlier than expected,” helped by the recent Japan–U.S. tariff policy agreement, which he believes will support growth while keeping price momentum intact.
He acknowledged that U.S. tariff measures could weigh on the American economy, with spillover effects on Japan. But he emphasized “It is important from a risk management perspective for the Bank to move closer to a neutral monetary policy stance”.
Delaying further moves, he warned, could lead to Japan “falling behind the curve,” forcing abrupt rate hikes later that might “inflict significant damage” on the economy.
