At its meeting on 17 and 18 September, the BOJ raised the policy rate by 0.25 percentage points, bringing the target range to approximately 1.25%. Against a backdrop of the weaker yen and rising crude oil prices, the BOJ signaled a policy of accelerating the pace of rate hikes amid concerns that the risk of higher inflation was increasing. Tokio Marine Asset Management provides an outlook for what lies ahead.
At its Monetary Policy Meeting held on 17 and 18 September, the BOJ decided to raise the policy rate from approximately 1.00% to approximately 1.25%. The decision reflected concerns that the underlying inflation rate could rise further as crude oil prices increased and the yen weakened, marking another rate hike just three months after the previous one.
Since August, comments from BOJ officials have included discussions about accelerating the pace of rate hikes, while speeches and press conferences by Deputy Governor Himino Ryozo (氷見野 良三) reinforced market expectations. Policy Board member Takata Hajime (高田 創) also addressed the possibility of consecutive rate hikes, leading the market to view this meeting as a shift toward a faster pace of rate increases.
In assessing the path of future rate hikes, the key points will be whether the Governor's press conference indicates a change in the assessment of upside risks to inflation and how the pace going forward, including the possibility of a rate hike within the year, is signaled. As an external factor, the market is focusing on moves to correct the yen's depreciation, and the foreign exchange market has entered a phase in which the yen's weakness is being corrected.