SATO, a Bank of Japan policy board member, said she supports a gradual approach
to policy rate adjustments, signaling acceptance of continued rate increases,
but warned household consumption remains weak and gave no timing for the next
hike. At the September policy meeting she and one other member voted against a
rate rise; both had been viewed by markets as reflationists favoring easier
monetary policy and active fiscal stimulus. That vote had prompted markets to
see further BOJ hikes as more difficult and the Japan–U.S. rate gap as unlikely
to narrow, contributing to yen weakness. SATO’s explicit acceptance of the need
to keep raising rates may reinforce market expectations that the BOJ will remain
on a tightening path.
