Ex-BOJ Policymaker Noguchi Calls for End to Reflation, Sees December Rate Hike to 1.5%

Former Bank of Japan board member Asahi Noguchi said Japan no longer needs expansionary fiscal and monetary policies, projecting a rate hike to 1.5% from 1.25% in December 2026. "Underlying inflation is near the BOJ's 2% target and wages are becoming embedded at levels consistent with 2% inflation," Noguchi said in an interview. Ultra-low rates risk yen weakness and imported inflation, he added. The BOJ accelerated tightening with hikes in June and September as Middle East conflict-driven energy costs and a weak yen — hovering near 158 per dollar — added price pressures. Noguchi, a reflationist who left the board in March, said rates could eventually reach 1.75% or 2%, but warned that 2% could shock households and firms accustomed to cheap borrowing. He also cautioned that Premier Sanae Takaichi's spending plans risk worsening Japan's finances and pushing up bond yields.