BOJ's Koeda warns against over-caution on rate hikes

Bank of Japan board member Koeda Junko said the bank should not become overly cautious about raising its policy rate, arguing that underlying inflation is anchoring around 2 percent while upside price risks from geopolitics have grown.

Why it matters: With the policy rate at about 1.25 percent after the September hike and Koeda's neutral-rate range at 1.1 to 2.5 percent, her remarks keep a further hike in play for upcoming meetings rather than signalling a pause.

Data as of Speech delivered October 15, 2026 in Kumamoto and published in full by the Bank of Japan; read in full from the bank's own PDF. Single primary source, no wire corroboration sought at this tier, hence grade B.

Bank of Japan policy board member Koeda Junko told local leaders in Kumamoto that the bank should adjust its policy rate in a timely manner and should not become overly cautious about raising it, pointing to considerable upside risks to prices alongside still accommodative financial conditions. She put the nominal neutral rate in a range of about 1.1 to 2.5 percent, against a policy rate of around 1.25 percent since the September hike, and said underlying inflation appears to be anchoring at about 2 percent.

Koeda placed greater weight than before on upside price risks from geopolitical shocks and climate change, noting that yen weakness during this year’s Middle East escalation kept import prices rising instead of offsetting them. She also endorsed the bank’s balance sheet path, with monthly JGB purchases cut by about 200 billion yen a quarter until March 2027 and set near 2 trillion yen a month from April 2027.

BOJ's Koeda warns against over-caution on rate hikes

Sources