The Bank of Japan raised its policy rate by 0.25% at its monetary policy meeting on the 18th, setting it at 1.25%. It maintained its policy of continuing to raise rates and emphasized addressing upside risks to prices.
The Bank of Japan decided at its monetary policy meeting on the 18th to raise its policy rate by 0.25%, to 1.25%. The latest rate hike came at a faster pace than before, signaling an emphasis on addressing upside risks to prices.
At a press conference, BOJ Governor Ueda Kazuo (植田 和男) said that, as underlying inflation approaches the 2% target, “there is a risk that it could overshoot the target,” emphasizing that the policy phase had changed. His comments left open the possibility of accelerating the pace of rate hikes.
The BOJ deemed it appropriate to continue raising rates and described financial conditions as “accommodative.” It also explained that future rate hikes would be “an adjustment to the degree of monetary easing.”
While some in the market expect the U.S. government's stance to influence policy and moves to anticipate an acceleration in rate hikes have spread, the neutral interest rate is estimated at 1.1–2.5%, leaving the eventual terminal level uncertain.