BOJ's Koeda Warns Against Excessive Caution on Rate Hikes Citing Inflation Risks

Bank of Japan Policy Board Member Junko Koeda stated the central bank should not be overly cautious about raising interest rates, emphasizing that substantial room remains for further increases. Speaking in Kumamoto, Koeda noted Japan's overnight policy rate stands at approximately 1.25% following a September hike, below the central bank's estimated nominal neutral rate range of 1.1% to 2.5%, which could exceed 2%. She warned of upside inflation pressures from yen weakness, geopolitical conflicts, and strong artificial intelligence demand, highlighting that underlying inflation is anchoring near the 2% target with over 70% of CPI items rising.