Sato's remarks soften the picture of a hardening dovish bloc that unsettled the yen after September's split vote. When one of the board's most reluctant members accepts that policy is still accommodative, the hurdle for the next hike looks lower, even if timing remains open. The oil link matters most. As a major crude importer, Japan feels Middle East supply disruption directly through import costs, and a dove citing that pressure suggests energy prices are now shaping the policy debate across the whole board. Her rejection of a pre-set pace leaves room to argue for delay, so the yen's response is likely to depend on whether other board members echo the gradual-but-onward message.

---

Earlier:

• BoJ’s Sato supports further rate hikes but avoids specifying timing. USDJPY remains confined.

---

The Bank of Japan's newest dove has signalled she is not against hiking, only against hurrying, and Middle East oil is doing much of the persuading.

Summary:

• BOJ board member Ayano Sato said she supports raising interest rates in several stages because financial conditions remain accommodative, Kyodo reported
• She said she agrees on the need for gradual adjustment but does not believe there should be a pre-set pace of hikes
• Sato said risks to the price outlook are skewed somewhat to the upside due to rising oil costs from the Middle East conflict
• She said the BOJ must set policy independently, in a way consistent with the government's proactive fiscal stance
• Sato, appointed under Prime Minister Sanae Takaichi, was one of two board members who voted against September's hike to 1.25%

Bank of Japan board member Ayano Sato said she supports raising interest rates in several stages as financial conditions remain accommodative, Kyodo News reported on Wednesday. Her comments suggest that one of the board's two September dissenters is not opposed to further tightening, only to a fixed timetable.

Sato said she agrees on the need for gradual adjustment to interest rates but does not think there should be a pre-set pace for hikes, according to Kyodo. She said risks to the price outlook are skewed somewhat to the upside because of rising oil costs linked to the conflict in the Middle East. She added that the BOJ must decide monetary policy independently while remaining consistent with the government's proactive fiscal policy.

The remarks stand out given Sato's record. Appointed to the board in June under Prime Minister Sanae Takaichi, who is known for her caution over rapid rate increases, Sato was regarded as an advocate of loose policy. At the September meeting, she and fellow Takaichi appointee Toichiro Asada voted against the BOJ's decision to lift its policy rate to 1.25% from 1%. Sato argued at the time that it was not yet the right moment to raise rates.

That 7-2 vote took the policy rate to its highest level since 1995, in the shortest interval between hikes under Governor Kazuo Ueda. The yen weakened on the decision as investors read the two dissents as a possible brake on further tightening.

Sato's comments complicate that interpretation. Her description of financial conditions as accommodative aligns with the BOJ's broader view that real interest rates remain deeply negative, and her concern about oil-driven inflation echoes the bank's earlier warnings about price risks from energy costs and a weak yen. Her objection now appears to be about pace rather than direction.

Analysts polled by Reuters after the September meeting expected the policy rate to reach 1.5% by the end of March and 1.75% in the second quarter of 2027. Sato's remarks do not change that path, but they make it less likely that the dovish members of the board would stand firmly in its way.

This article was written by Eamonn Sheridan at investinglive.com.

Source: Investing Live - Central Bank