Former BOJ Governor Kuroda Supports Continued Rate Hikes, While Former Deputy Governor Wakatabe Warns Against Premature Tightening
nashnova research
Two former Bank of Japan leaders have split publicly on the pace of rate hikes — Haruhiko Kuroda supports discussing a 25-bp raise at every meeting, while Masazumi Wakatabe warns tightening makes no sense when real growth is negative — complicating the market's read on what comes next.
What did Kuroda say?
In a book published this month, former BOJ Governor Haruhiko Kuroda stated the central bank should review whether to raise rates by 25 basis points at every policy meeting, moving gradually toward the neutral rate — the level that neither stimulates nor restrains the economy.
This means → he is publicly endorsing current Governor Kazuo Ueda's policy-normalization path, signaling confidence that Japan has exited deflation for good.
He added a caveat: hiking too fast risks stalling the economy, too slow risks leaving normalization unfinished. Put simply = he backs hikes, but wants a steady walk, not a sprint.
Why does Wakatabe disagree?
Former Deputy Governor Masazumi Wakatabe laid out three objections in his own book, published in September: real economic growth remains weak, roughly half of current inflation is cost-push rather than demand-driven, and hiking while real growth is negative demands heavy justification.
This means → in his view, Japan's price gains are "hollow" — not consumers spending more willingly, but import-cost increases passed on to households.
Raising rates under those conditions is like cutting the IV drip on a patient who hasn't truly recovered — the risk is substantial.
Why are two Abenomics allies fighting?
The split traces back to how each man inherits the legacy of Abenomics. Kuroda was the chief executor of Abe's monetary easing; he now believes that mission is complete and it is time to pivot.
Wakatabe is close to current Prime Minister Sanae Takaichi and equally committed to the Abenomics legacy, yet he argues for a slower pace — this reflects a fundamental disagreement within the same camp over when to declare victory.
In plain terms = both are "Abenomics people," but one says "the medicine worked — stop taking it," while the other says "the patient isn't fully recovered — don't pull the needle yet."
What does this mean for the BOJ's next moves?
The BOJ has already hiked rates multiple times, pushing them to 1.25% in September — the highest in 31 years — and is expected to declare victory on its 2% inflation target this Friday, the first time in 14 years.
Wakatabe currently sits on a key government economic advisory council and is seen as a candidate for the next BOJ governor — if Takaichi stays in office long enough, she could appoint him when Ueda's term expires in 2028.
This means → the dispute is more than academic: Wakatabe's stance could directly shape post-2028 BOJ policy direction, forcing markets to price both "the current Ueda path" and "a possible future Wakatabe path" simultaneously.
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