At its 17–18 September meeting, the Bank of Japan decided to raise the policy rate to 1.25%. Several committee members recognized an upside risk of underlying inflation exceeding 2%, and views were expressed that conditions had changed.
Following its 17–18 September Monetary Policy Meeting, the Bank of Japan decided to raise the policy rate to 1.25%. The minutes of the meeting were released and presented a broad range of perspectives, including the impact of wage increases.
Many committee members shared the view that there was an upside risk of underlying inflation exceeding the 2% target, and expressed the view that the rate hike was appropriate. Whereas the previous view had been that conditions pushing prices higher would continue, some members pointed to a change toward a phase of stabilizing prices.
Several members emphasized that financial conditions had become more accommodative, including movements in asset prices such as higher stock prices and a weaker yen. There was also recognition that the pace of tightening would have to accelerate if signs of an upside surprise in inflation emerged.
Some members argued that maintaining the current policy stance remained desirable, as they had in June. The meeting decided on a rate hike by a majority of 7 votes in favour to 2 against.