The Bank of Japan released the minutes of its September monetary policy meeting, which showed views that the pace of future rate hikes could accelerate depending on price trends, as well as an opinion that the policy rate should be brought closer to its approximate goal sooner.
The Bank of Japan released the minutes of its meeting held on 17–18 September, at which it raised the policy rate from 1.0% to 1.25%. This was the first rate hike in 3 months and accelerated the previous pace of approximately one hike every 6 months.
One board member expressed the view that “it would be desirable to bring the policy rate closer to its approximate goal sooner and create conditions in which it can move flexibly in either direction.” Another member said of the future pace, “If signs of an upside surprise in prices emerge, we will have no choice but to accelerate the pace.”
Another member said, “We should not become excessively cautious, but should respond in a timely manner while broadening the scope of our analysis and increasing its resolution,” suggesting a flexible response to changes in overseas financial conditions.
The minutes also included discussion of the concept of the neutral interest rate, which was estimated at 1.1%–2.5% on a nominal basis. The Bank of Japan shared the view that financial conditions would remain accommodative even after the rate hike.