Japanese Government Advisor Calls on BOJ to Gradually Raise Rates to Correct Yen Weakness
Claire Weston
Toshihiro Nagahama, economic adviser to PM Takaichi, said the BOJ should hike twice more at six-month intervals, lifting rates to a neutral 1.5% to fix excessive yen depreciation.
What exactly did the adviser propose?
Nagahama pegs Japan's nominal neutral rate — the level that neither boosts nor brakes growth — at roughly 1.5%.
The current policy rate sits at 1%; he recommends two more hikes, one every six months.
This means → if the BOJ follows through, rates would reach his "neither accelerator nor brake" level in about a year.
Why does he link rate hikes to the yen?
Nagahama stated explicitly: "Moderate BOJ rate hikes are essential to correct excessive yen weakness."
In plain terms = Japan's ultra-low rates push capital toward higher-yielding dollar assets, keeping the yen under persistent selling pressure.
This reflects a shift inside Japan's policy circles: yen weakness is now treated as a problem requiring a policy response, not just a market outcome to ride out.
How much weight does this carry?
Nagahama is an economic adviser to PM Shigeru Takaichi — a government voice, not a BOJ decision-maker.
This means → his remarks signal the administration's policy lean, but the BOJ's next move still depends on its own assessment.
The key signal: a government figure publicly urging the central bank to hike shows the executive branch's tolerance for yen depreciation is narrowing.
Content is for reference only, not financial advice.