At the BOJ's October meeting, several members said rates should be raised to the neutral rate level at an early stage after underlying inflation reached the 2% target. Meanwhile, the BOJ left the policy rate unchanged at 1.25%.
Minutes of the BOJ's Monetary Policy Meeting held on 29 and 30 October were released, showing that the view had been expressed that the underlying rate of inflation had reached the 2% target. Against this backdrop, several members called for the policy rate to be raised to the neutral rate level.
According to the minutes, 3 of the 9 Policy Board members called for the policy rate to be raised promptly to the level considered neutral. One member said that the effects of previous rate hikes had yet to become apparent and that financial conditions remained accommodative, adding that the BOJ was entering a new phase in which it should accelerate the pace of moving toward the neutral level.
The impact of the next rate hike on private consumption was also discussed. The assessment was that it would have both positive and negative effects, with no significant net negative impact. The view that there was little reason to hesitate over a rate hike amid continued price increases was brought into relief.