BOJ Member Advocates Gradual Rate Hikes Amid Policy Debate

Bank of Japan (BOJ) board member Ayano Sato has signaled her support for a gradual approach to interest rate hikes in Japan, emphasizing flexibility over a pre-set tightening schedule. Sato, who dissented from the central bank's September rate increase, cited weak consumption and insufficient underlying inflation as reasons for her caution. She argues that future rate adjustments should depend on clear improvements in household spending and income trends.

According to Reuters, citing Kyodo, Sato backs the idea of raising interest rates in stages rather than adhering to a fixed pace. She voted against last month's rate hike, stating that consumption lacks momentum and underlying inflation is not accelerating. Sato's stance highlights the ongoing debate within the BOJ regarding the appropriate timing and pace of monetary policy adjustments.

Appointed by dovish Prime Minister Sanae Takaichi, Sato is one of two board members who opposed the September rate hike. Her comments suggest that even officials open to further tightening prefer more evidence on domestic demand and inflation before supporting additional moves. This keeps focus on household spending and wage-related income as key indicators for Japan's next monetary policy steps.