BoJ's Asada Warns Further Rate Hikes Carry Growing Risks Inside Neutral Policy Range

Bank of Japan board member Toichiro Asada has urged caution regarding future interest rate hikes, warning they carry escalating risks of dampening real economic activity now that borrowing costs sit within the estimated neutral range of slightly above 1% to 2.5%. With the policy rate at 1.25% following hikes in June and September that Asada opposed, he noted domestic consumption remains flat and rate-hike impacts can lag by a year or more. The dovish remarks challenge market consensus for a 25 basis point hike to 1.50% at the December 17-18 meeting as USD/JPY nears 160.