BOJ policymaker Asada cautions against premature rate hikes, warns of growth risks

Bank of Japan (BOJ) policymaker Toichiro Asada on Thursday cautioned against raising interest rates too quickly, warning that premature monetary tightening could undermine economic growth and push down underlying inflation.

Speaking to business leaders in Nagasaki, southern Japan, Asada highlighted the risk of inflation overshooting the central bank's 2% target but stressed that the impact of past and future rate hikes on economic activity and underlying price pressures also needed consideration.

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According to Reuters, Asada argued that recent price increases were not necessarily driven by strong demand, suggesting that the BOJ should exercise caution in determining the pace of further monetary tightening.

Asada welcomed data showing that real wages had turned positive since the beginning of 2026. However, he noted that economic growth and consumer spending continued to lack momentum, raising concerns about the strength of domestic demand.

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He also warned that raising borrowing costs too rapidly could cool economic activity and weaken underlying inflation, making it important for the central bank to carefully assess the timing and pace of policy adjustments.

Asada has previously dissented from the BOJ's decisions to raise interest rates in June and September, reflecting his cautious stance on further monetary tightening.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)