BoJ board member Asahi Noguchi said today that the central bank could resume interest rate hikes once U.S. tariff risks recede, but emphasized that any tightening must “measured, step-by-step”.
He warned that maintaining very low real interest rates for too long risks undermining the economy by pushing Yen lower and stoking undesirable inflation. A weaker currency, he said, lifts prices through import costs and boosts exports in a way that can overheat the economy .
Noguchi highlighted that Yen depreciation was once a tailwind during Japan’s deflation era, supporting exporters and helping revive demand. However, “as supply constraints intensify, the positive effects eventually disappear and are replaced by negative effects that merely push inflation higher than needed,” he added.
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