Bank of Japan Board Member Asahi Noguchi expressed on September 29, 2025 that the need for interest rate hikes in Japan is growing “more than ever,” signaling a possible breakthrough in the country’s hitherto accommodative monetary policy. Noguchi, so far seen as a dovish member of the BOJ, notes stable economic progress, inflation approaching the 2% target, and an increase in wages and costs, which means that the arguments for continuing the ultra-loose policy have weakened.
At the same time, during the September meeting, two members of the BOJ board – Naoki Tamura and Hajime Takata – voted in favor of raising rates, even though officially the rates remained unchanged (0.5%). This is a signal that the resistance line inside the central bank has shifted — more hawkish opinions are starting to have more weight. In response, the markets began to increasingly discount the possibility of raising rates in October, although much will depend on further inflation data and the condition of the labor market.
For investors, this means several challenges and opportunities: a stronger yen, if rates go up, could reduce exporters’ margins, but it could also attract capital, especially into local bonds and yen-denominated assets. It is worth keeping an eye on BOJ publications (e.g. Tankan), wage data and inflation rates — they can be a catalyst for monetary policy moves. Assets that tend to benefit from monetary tightening (e.g., banks, financials) may be a portfolio element worth considering, with a hedge against the risk of strong currency appreciation.