Ex-BOJ chief Kuroda backs more rate hikes; former deputy Wakatabe urges caution

what happened

Former Bank of Japan governor Haruhiko Kuroda, in a new book, says the central bank will likely consider raising interest rates by 25 basis points at each upcoming meeting to bring them closer to a neutral level for the economy. He warns that moving too hastily could stall growth, while moving too slowly could stop incumbent governor Kazuo Ueda from completing the normalisation of policy.

His former deputy Masazumi Wakatabe takes the opposite view. In his book, published in September, he argues that real growth remains weak and that half of recent price increases come from cost pressures, so the BOJ would need strong justification to raise rates. Wakatabe is close to Prime Minister Sanae Takaichi and sits on a key government economic panel.

According to Reuters, the BOJ has raised rates several times, reaching a 31-year high of 1.25% in September, and is expected to declare victory on its inflation target on Friday.

why it matters

The split matters for markets because it frames the debate over how fast the BOJ tightens. Hawkish and cautious views both shape expectations for the yen, Japanese government bond yields and future rate paths. The books are personal opinions, not policy decisions, but they signal where internal discussion may go.

market impact

Yen and JGBs: the debate over the pace of BOJ hikes shapes expectations for USD/JPY and JGB yields.

tags

instruments