The Bank of Japan raised its policy rate to 1.25% at its September meeting, leaving the surprise element that 2 members opposed the decision. Developments in S-rank speeches are attracting attention as a key to gauging the terminal rate.
The Bank of Japan decided to raise its policy rate to 1.25% at its September monetary policy meeting. The decision was approved by 7 votes to 2, with the dissenting votes cast by board members Asada Toichiro (浅田統一郎) and Sato Ayano (佐藤綾野). A rate hike had been regarded as fully priced in immediately before the meeting, so the result itself came as little surprise.
This article identifies a recommendation from U.S. Treasury Secretary Bessent as a factor that could determine whether the pace of rate hikes accelerates. It presents the view that a request made in the form of a public recommendation helped encourage the Bank of Japan to accelerate its pace of rate hikes.
Against the backdrop of the relationship between the government and the Bank of Japan, as well as the central bank’s independence, the focus will be on how the Bank of Japan explains and accounts for any acceleration in the pace of future rate hikes. Some have pointed out that an explanation based on the Bank of Japan’s own logic will be required.
Comments in upcoming economic data releases and speeches could serve as catalysts for rate hikes. Particular attention will be paid to the October Outlook Report, speeches by the Governor before and after its release, and regional speeches.