The Bank of Japan decided to raise rates at its September monetary policy meeting, with the prospect remaining that it will implement 0.25 percentage-point hikes every 3 months. At the same time, some have pointed out that remarks by government officials could weaken criticism of the Bank of Japan.
The Bank of Japan held a monetary policy meeting on 17–18 September and decided to raise rates again. The article explains that, following the decision, the statement retained language signaling vigilance over inflation risks.
The statement retains wording that contemplates the possibility that "the risk of inflation rising above the price stability target will become apparent," and the article interprets this as indicating that the focus of monetary policy has shifted toward inflation risks. It also quotes the governor as saying that "the phase has changed," reinforcing the assumption of one rate hike every 3 months.
At the September press conference, Governor Ueda Kazuo (植田 和男) denied the "conditions for a large 0.5% rate hike or consecutive rate hikes," and the article interprets this as indicating that future hikes will generally be in 0.25 percentage-point increments. Although the market reaction included an excessive depreciation of the yen, it has also been suggested that the tone could change in response to remarks by government officials.
The article cites remarks by Prime Minister Takaichi Sanae (高市 早苗), who said, "I am not a reflationist," and by Minister of State for Economic and Fiscal Policy Kiuchi Minoru (城内 実), who said, "Reflationary policy is over," presenting speculation about their impact on the Bank of Japan's future rate-hike policy. In conclusion, it presents a scenario in which the Bank of Japan implements a 0.25% rate hike in December or January next year and is expected to raise rates again within the year.
Points to watch going forward include the timing, size and number of the next rate hikes, as well as the impact of government remarks on the market.