Kuroda calls for continued rate hikes and tighter fiscal policy
Japan's economy has shifted from deflation to inflation under different economic conditions
Kuroda disagrees with Takaichi's expansionary fiscal policy
BOJ could raise rates to 1.5-1.75% in coming years if economy sustains momentum
📖 Full Retelling
Former Bank of Japan chief Haruhiko Kuroda called for continued interest rate hikes and tighter fiscal policy in Tokyo on February 25, 2026, as Japan's economy is already in 'great shape' with solid growth and steady wage gains, warning that Premier Sanae Takaichi's big spending plan could stoke an inflationary upswing. Kuroda, who is known for launching radical monetary stimulus in 2013 as part of former Prime Minister Shinzo Abe's 'Abenomics' reflationary policies, suggested that the BOJ can probably raise interest rates about twice a year in 2026 and 2027. He emphasized that Japan's economic landscape has transformed since the days of Abenomics, when the country was suffering from deflation and a strong yen, to now experiencing inflation and a weak yen, requiring a shift toward tighter fiscal and monetary policy. The remarks highlight a striking divergence in policy thinking between Kuroda — Abenomics' most ardent architect — and its current torchbearer, Takaichi. While the BOJ has already exited Kuroda's stimulus and raised rates several times including in December, fiscal policy remains expansionary under Takaichi, who has ramped up spending and pledged to suspend an 8% sales tax on food to cushion households from rising living costs. Kuroda warned such expansionary fiscal policy could backfire by fueling inflationary pressure and pushing up bond yields, suggesting that while supporting innovation makes sense, spending money to cushion the blow from rising living costs would be counterproductive.
# Sanae Takaichi
**Sanae Takaichi** (高市 早苗, *Takaichi Sanae*; born 7 March 1961) is a Japanese politician serving as the **Prime Minister of Japan** and President of the Liberal Democratic Party (LDP) since October 2025. She is the first woman in Japanese history to hold either office. A veteran le...
Abenomics (アベノミクス, 安倍ノミクス, Abenomikusu) refers to the economic policies implemented by the Government of Japan led by the Liberal Democratic Party (LDP) since the 2012 general election. They are named after Shinzo Abe (1954–2022), the longest serving Prime Minister of Japan, governing from 2012 to 2...
The Bank of Japan (日本銀行, Nippon Ginkō; BOJ) is the central bank of Japan. The bank is often called Nichigin (日銀) for short. It is headquartered in Nihonbashi, Chūō, Tokyo.
try{ var _=i o; . if(!_||_&&typeof _==="object"&&_.expiry AMD stock surges 14% on Meta AI partnership deal Bitcoin slips, wipes out 50% from October record high at session low Wall Street ends higher on tech rebound ahead of State of the Union address Software stocks rebound as Anthropic partnerships ease AI disruption fears (South Africa Philippines Nigeria) Exclusive-Ex-BOJ chief Kuroda calls for rate hikes, tighter fiscal policy By Reuters Economy Published 02/25/2026, 01:03 AM Updated 02/25/2026, 01:06 AM Exclusive-Ex-BOJ chief Kuroda calls for rate hikes, tighter fiscal policy 0 Japanese Yen US Dollar 0.22% JGB -0.31% By Leika Kihara TOKYO, Feb 25 - Japan must keep raising interest rates and tighten fiscal policy as the economy is already in "great shape," former central bank chief Haruhiko Kuroda said, warning that Premier Sanae Takaichi’s big spending plan could stoke an inflationary upswing. With the economy enjoying solid growth and steady wage gains, the Bank of Japan can probably raise interest rates about twice a year in 2026 and 2027, said Kuroda, who is known for launching his radical monetary stimulus in 2013 as part of former Prime Minister Shinzo Abe’s "Abenomics" reflationary policies. "When Abenomics was deployed, Japan was suffering from deflation and a strong yen. Now, Japan is experiencing inflation and a weak yen. Japan needs to move toward tighter fiscal and monetary policy," Kuroda said in an interview on Tuesday. "The BOJ must gradually raise interest rates towards levels deemed neutral to the economy. Fiscal policy must be tightened, too," Kuroda said. "I wonder whether increasing spending and cutting taxes would be appropriate." The remarks highlight how Japan’s evolving economic landscape has driven a striking divergence in policy thinking between Kuroda — Abenomics’ most ardent architect — and its current torchbearer, Takaichi. The ex-BOJ chief’s tenure ended in 2023 after a decade-long push to fire up growth and inflation with unorthod...
