Bank of Japan board member Toichiro Asada said any further interest rate hikes should be carefully timed, warning that monetary tightening is exerting a growing drag on economic activity as policy rates approach neutral levels. In a recent speech, he pointed out that private consumption remains weak and that the latest price increases have not necessarily been driven by robust demand, thereby increasing the risk that additional tightening could dampen growth and push down underlying inflation.
Asada noted that real wages have stayed in positive territory since early 2026, supported by three consecutive years of solid base-pay hikes and higher bonuses. However, he emphasized the importance of closely monitoring actual consumer price trends before concluding that underlying inflation can sustainably remain above the 2% target. He added that further tightening would be more appropriate once wage growth more clearly feeds through into stronger, demand-driven inflation.