The BOJ released its “Summary of Opinions” from its September Monetary Policy Meeting, highlighting a growing number of committee members supporting a regime-shift view, despite the BOJ’s previously strong hawkish tone, and bringing greater flexibility in future policy management into focus.
On 1 October, the BOJ released its “Summary of Opinions” from the September Monetary Policy Meeting. Overall, the content was strongly hawkish, with many committee members referring to the view that financial conditions remain accommodative, the risks associated with inflation and the need for further rate hikes.
Committee members Takata and Tamura had previously been regarded as representative hawks, but the latest “Summary of Opinions” indicated a view that many members were moving toward Takata-style regime-shift theory. Avoiding the risk of inflation exceeding 2% is becoming the central focus of debate, rather than achieving the 2% target.
Analysis also indicated that neutral-rate proponents could become relatively more dovish. Attention was drawn to the view that policy rates should be brought closer to an approximate goal and a framework established for agile moves in either direction, allowing flexible responses to unexpected developments in the economy and prices.
Calls to prioritize flexibility after reaching the neutral rate imply the possibility of shifting to a flexible response, including rate cuts, if downside risks materialize. While the likelihood of further rate hikes would increase if prices continue to rise faster than expected, the view was expressed that the stance could change depending on circumstances.