BOJ’s Koeda Calls for More Rate Increases as Prices Climb in Japan

Bank of Japan (BOJ) Policy Board member Junko Koeda urged further rate increases, with prices higher year over year for more than 70% of the items in Japan’s consumer price index.

In an Oct. 15 speech in Kumamoto, Koeda said more than 70% of more than 500 goods and services in the index had recorded higher prices than a year earlier. She put underlying inflation at roughly the BOJ’s 2% target, while pointing to yen weakness, higher import costs and global demand associated with artificial intelligence as potential sources of further price pressure.

Koeda said the bank “should not become overly cautious about raising the policy interest rate.” She also said officials need to keep monitoring the effects of earlier rate increases on households.

The BOJ raised its overnight rate target to around 1.25% after a 7-2 vote on Sept. 18. The higher target took effect Sept. 24 in Japan, and Koeda supported the increase.

The BOJ’s July projections put inflation, excluding fresh food, at 2.5% for fiscal 2026 and 2.4% for fiscal 2027. The bank’s next policy meeting is scheduled for Oct. 29-30 in Japan.