The BOJ raised its target for the uncollateralized overnight call rate to 1.25% at its September monetary policy meeting, the highest level since 1995. Committee Members Asada and Sato voted against the decision, highlighting differences in views on the strength of inflation and economic conditions behind the policy judgment.
At its monetary policy meeting on 18 September, the BOJ decided by a majority vote to raise its target for the uncollateralized overnight call rate to 1.25%. Coming roughly three months after the previous rate hike in June, the move is viewed as an acceleration in the pace of rate increases.
The decision included dissenting votes from Committee Members Asada and Sato. Their opposition is said to have reflected the fact that core CPI remained below 2% and their view of economic and price conditions that “a rate hike at this time would not be appropriate.”
Against the backdrop of the policy decision, it has been pointed out that policy factors, including energy subsidies and free high school tuition, may be suppressing the pace of price increases. The figures in the indicators published by the BOJ are also said to have possibly influenced the two committee members’ judgments.
BOJ core CPI averaged +1.9% year on year from March through July, below 2%, while it has been explained that on a base-adjusted calculation it could jump to around +2.5%. Assessment continues of the situation in which inflation remains relatively low compared with other major countries, against a backdrop of Japan’s high dependence on energy.