MNI BRIEF: BOJ's Takata Sees Price Target In Sight

Bank of Japan board member Hajime Takata said on Monday that Japan’s economy is at a stage where the price stability target is nearly achieved, signaling his continued support for raising the policy interest rate, though he did not elaborate on timing.

“Firmness in the U.S. economy has been maintained since then. As U.S. long-term interest rates have bottomed out and the yen's appreciation has been avoided even after the Federal Reserve's September rate cut, I believe that this rate cut, unlike cases seen repeatedly in the past, will not act to constrain rate hikes in Japan,” Takata told business leaders in Hiroshima City.

 “It is necessary to bear in mind the risk that Japan might face greater-than-expected upswings in prices if factors that push up prices emerge. In light of expectations in 2026 for the fourth round of wage increases since 2023, mainly in the form of base pay increases, I believe that the Bank should make a further gear shift, and engage in communication that assumes that the price stability target has been almost achieved."

Takata also noted that momentum toward achieving the outlook for domestic prices would not be dampened by overseas factors. "Given this situation, my view is that the 'planned suspension' I mentioned – or the preemptive downward revision of the outlook since the first half of 2025 ahead of the 'typhoon' approaching from overseas – will be lifted. Discussions that assume achievement of the price stability target therefore need to take place,” he said.

Takata’s hawkish remarks were in line with market expectations, following his dissent at the September meeting, where he had proposed raising the policy rate to 0.75%, though the majority of board members voted against it. (See MNI BOJ WATCH: Ueda Says Rate Hikes Will Come; No Timing Hints)

Takata said there has been a shift away from the deflationary norm and that the price stability target has been “more or less achieved.”