BOJ Policy Board member Koeda Junko (小枝淳子) explicitly stated that the neutral interest rate is at a level considerably above 1% and signaled a willingness to support further rate hikes while accommodative financial conditions persist. While acknowledging considerable inflation risks, she indicated that the pace of rate hikes would not be overly cautious.
In a speech at a meeting on financial and economic affairs held in Kumamoto, BOJ Policy Board member Koeda Junko (小枝淳子) referred to the level of the neutral interest rate in discussing future policy management. She explicitly stated that it is at a level "considerably above" 1%, which is considered the lower end of the estimated range.
The speech pointed to several years of stable wage increases and price rises across a broad range of items, and used stronger language to suggest that Japan's inflation rate is becoming more persistent than in the past.
She said policy should be adjusted in a timely manner while considering the estimated neutral interest rate and monitoring economic and price conditions, and presented an analysis indicating that upside risks to prices would increase in both fiscal 2026 and fiscal 2027.
While expressing the view that overall financial conditions would remain accommodative, the speech highlighted that the BOJ is becoming more vigilant about upside inflation risks when determining the pace of future rate hikes.