Several views emerged at the BOJ's October meeting in favor of considering an early rate hike. While leaving the policy rate unchanged at around 1.25%, the BOJ indicated that decisions at subsequent meetings would be made on a meeting-by-meeting basis.
At its monetary policy meeting on 29 and 30 October, the BOJ heard several committee members express support for an early rate hike. Among the key “views” was a shared recognition that the BOJ should not be overly cautious about the timing of the next hike and should implement it when conditions permit.
Several committee members argued that the policy rate should be raised promptly toward its neutral level. With underlying inflation reaching 2%, some said the BOJ should assess financial conditions over the course of several months and move ahead with rate hikes without undue delay.
The BOJ decided at the meeting to leave the policy rate unchanged at around 1.25%. The governor's view was that decisions would be made at each policy meeting, including the next one, indicating that a December rate hike had not been ruled out. Policy Board member Takata Hajime (高田創) proposed raising the rate to around 1.5%, but the proposal was rejected by a majority vote.
As for views among market participants and analysts, an economist survey found that 83% expected the next rate hike to come at the December meeting, while the interest-rate swap market implied a probability of just under 80% for a December hike.