The minutes of the BOJ's September meeting revealed that members had discussed the terminal rate, the final destination for the policy rate. The level at which the current rate-hike cycle will converge may have begun to attract attention.
The Bank of Japan published on the 5th the minutes of its Monetary Policy Meeting held on 17 and 18 September. The minutes show that members discussed the concept of the terminal rate and views on the neutral rate. They suggest that the terminal rate, an indicator linked to financial-market assessments, is regarded as important in guiding future monetary policy.
At the meeting, the BOJ raised its policy rate to approximately 1.25%, the highest level in about 31 years. The minutes may have prompted speculation that members discussed a level that could signal the end of the current rate-hike cycle.
The minutes explicitly state that the neutral rate is estimated to be generally in the range of 1.1% to 2.5%. These indicators are regarded as important clues in gauging the terminal rate.
Several members pointed out that financial markets had expressed a range of views on the terminal rate and neutral rate, and shared the view that these levels had generally shifted higher.