BOJ Governor Ueda (植田) said the policy phase had changed as the Bank worked toward price stability, and said it would carefully consider the timing and pace of rate hikes. At its policy meeting, the Bank changed its guidance target from 1.0% to around 1.25% and indicated that it would consider further rate hikes in response to economic conditions.
BOJ Governor Kazuo Ueda (植田 和男) said the policy phase had changed, given that underlying inflation was approaching 2%. He indicated that the Bank was moving from a phase in which firmly achieving a stable 2% inflation rate was the primary objective to one in which it would respond while assessing the impact of upside risks to prices on the economy.
Regarding the possibility of rate hikes, he said that moves exceeding 25 basis points could not be ruled out, stating that there were “various possibilities depending on price developments,” and explained that no particular approach could be ruled out in advance. At the same time, he said that a sharp rate hike leading to a major adjustment in asset prices should be avoided.
He indicated that large or consecutive rate hikes would be necessary when the risk of inflation rising significantly above the target was high or when inflation was already above the target. The BOJ emphasized its intention to pursue proactive policy management to avoid such situations.
The latest rate hike changed the BOJ’s policy rate guidance target from around 1.0% to around 1.25%, with the decision receiving 7 votes in favor and 2 against. Governor Ueda (植田) said that financial conditions remained accommodative even after the decision and indicated that the BOJ would continue to consider additional rate hikes in response to economic, price and financial conditions. The dissenting members were Tōichirō Asada (浅田 統一郎) and Ayano Sato (佐藤 綾野).