The Bank of Japan released the main opinions behind its decision to raise the policy rate to 1.25% at its September meeting. The discussion focused on views that the pace of rate hikes should be accelerated if signs of an upside surprise in prices emerge, as well as consideration of the impact of yen depreciation.
The Bank of Japan released the main opinions from its monetary policy meeting held on 17 and 18 September. One policy board member pointed out that “raising rates three months after the previous hike would shorten the interval, but that was because the economy had remained resilient.”
One member said, “We need to signal to the market our determination to prevent an upside surprise in prices and take into account the effects transmitted through the foreign exchange market.” Another view was that a rate hike was necessary to curb imported inflation caused by yen depreciation.
At the meeting, views were expressed that the risk of an upside surprise in underlying inflation had become evident and that the policy stance should be changed to avoid adverse effects on the economy. Meanwhile, both committee members Asada Toichiro (浅田統一郎) and Sato Ayano (佐藤綾野) opposed the rate hike.
The BOJ indicated that it might change its policy stance at the meeting and said it would assess future price trends and economic conditions.