BOJ should take cautious stance on rate hikes: board member

The Mainichi

22-05-2025

TOKYO (Kyodo) -- The Bank of Japan should adopt a cautious approach on raising short-term interest rates as it needs to take time to examine the economic impact of its actions, a board member said Thursday.
"I believe it is crucial that the bank take a measured, step-by-step approach," Asahi Noguchi, seen as a monetary dove, said in a speech, describing such a stance as taking "sufficient time" to assess the effects each time the BOJ raises its policy rate.
The BOJ has raised the key rate three times since March last year, when it carried out its first hike in 17 years, as it moves to normalize monetary policy following a decade-long framework of unconventional easing.
On the BOJ's reduced purchases of Japanese government bonds, which began in August last year, Noguchi said he sees no need "at this point to make any major changes," with the central bank expected to decide on whether to review its current plan at the next policy meeting in June.
As part of measures to normalize monetary policy, the BOJ decided last July to reduce asset holdings on its bloated balance sheet, with the plan covering the period through March 2026.
"The bank will need to examine the reduction plan for April 2026 onward from a longer-term perspective," Noguchi said, adding the BOJ has sufficient time to reduce the size of its balance sheet, which would be desirable to maintain market stability.