Monetary policy in Japan is nearing a long-awaited exit from years of large-scale easing, Bank of Japan board member Hajime Takata said in a speech on Wednesday. He called it a “true dawn” as the central bank gradually shifts gears. Takata noted firms’ behavior has turned more positive, while financial conditions remain accommodative, and deeply negative real interest rates have spurred corporate lending across industries. He argued for further gradual rate hikes, guided by overseas developments and a broad range of domestic data, rather than rushing to a neutral rate. However, he warned that external shocks could push inflation higher than expected. In January, Takata dissented from an 8-1 decision to hold rates at 0.75%, proposing a hike to 1.0%, and noted that concerns over U.S. tariffs have since eased.
