The Bank of Japan decided at its Monetary Policy Meeting to raise the policy rate from around 1.0% to around 1.25%, its first additional rate hike in three months. The rate is now at its highest level in about 31 years.
The Bank of Japan decided at its Monetary Policy Meeting on the 18th to raise the policy rate from around 1.0% to around 1.25%. This is the first additional rate hike since the June meeting, three months ago, and the shortest interval between rate hikes since the policy shift.
The policy decision was approved by a majority of 7 of the 9 members. The 2 dissenting members were Policy Board members Asada Toichiro (浅田統一郎) and Sato Ayano (佐藤綾野), who opposed the rate hike.
The BOJ believes that underlying inflation, excluding temporary factors, is approaching 2%, and is concerned that prices could exceed 2% if accommodative financial conditions continue. Higher oil prices amid tensions in the Middle East and a weaker yen could also push up inflation.
Since the June rate hike, the BOJ has been described as aiming to scale back the degree of monetary easing. It has also cited continued growth in outstanding loans as a factor. Attention is focused on developments in financial markets as a guide to its exit strategy.