Japan's main opposition leader calls for gradual BOJ rate hikes

"The BOJ should raise interest rates gradually without committing to hike at a set pace," he said, adding the central bank should hike cautiously with a close eye on economic and overseas developments. Noda's party has gained clout since a major victory in a general election on Oct. 27 - though it remained well short of a majority.

The Bank of Japan must raise interest rates and continue phasing out its controversial stimulus programme, Yoshihiko Noda, leader of Japan's biggest opposition party, told Reuters on Friday.

"It is wrong to focus too much on keeping monetary policy ultra-loose when Japan is experiencing inflation," said Noda, who heads the Constitutional Democratic Party of Japan (CDPJ). The BOJ should continue phasing out remnants of former Governor Haruhiko Kuroda's radical stimulus programme, which has caused various side-effects such as excessive yen weakness, he said.

The weak yen has caused more harm than good to Japan's economy by pushing up import costs and hurting households, Noda said. "The BOJ should raise interest rates gradually without committing to hike at a set pace," he said, adding the central bank should hike cautiously with a close eye on economic and overseas developments.

Noda's party has gained clout since a major victory in a general election on Oct. 27 - though it remained well short of a majority. The CDPJ has criticised former BOJ chief Kuroda's radical monetary stimulus, deployed in 2013, as hurting financial institutions' profits and distorting market functions.

The BOJ exited Kuroda's radical stimulus in March and raised short-term interest rates to 0.25% in July on the view Japan was progressing towards durably achieving its 2% inflation target.

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