BOJ Governor Ueda Kazuo (植田和男) suggested at a press conference that consecutive rate hikes would be difficult. The bank raised its policy rate from 1.0% to 1.25% at its meeting on the 18th and was reported to have indicated that it would continue raising rates cautiously.
The Bank of Japan raised its policy rate from 1.0% to 1.25% at its monetary policy meeting on the 18th. At the press conference held after the meeting, the bank indicated that it would continue to consider rate hikes as an option. This article reports on the BOJ's official explanation together with the market's interpretation. The specific pace and timing of future rate hikes remain subject to further announcements.
It was reported, citing BOJ officials, that this was the first time the bank had presented a policy reaction function. A policy reaction function is the logic used to explain under what circumstances monetary policy will be changed, and has been cited as a key to understanding the BOJ's decision-making process.
At the press conference, the BOJ was said to have provided specific explanations for the basis of its accommodative stance. The comments suggested that future rate hikes should be judged cautiously, and that consideration of additional rate hikes could move forward.
Market participants increasingly appear to believe that, while the BOJ raised rates to 1.25%, it will continue to work through the challenges of additional rate hikes. It was reported that the pace could change depending on future policy operations and price trends.