The BOJ's minutes of its September meeting show that members discussed the size of the rate hike, while recognizing the risk that inflation would exceed 2%. After the meeting, it decided to raise the policy rate by 0.25 percentage points to approximately 1.25%.
The minutes of the BOJ's Monetary Policy Meeting held on 17-18 September, published by the BOJ on the 5th, indicate that several members called for discussion of the size of rate hikes. The minutes state that many members recognized the risk of inflation exceeding the 2% target.
At this meeting, the BOJ decided to raise the policy rate by 0.25 percentage points to approximately 1.25%. The rate hike, the first since June, represented a move toward shortening the interval from the previous pace of approximately once every six months. 2 members opposed the decision.
According to the minutes, one member expressed the view that the economy had entered a new phase requiring discussion of the size of rate hikes, while another member said, in substance, that the pace of rate hikes would need to be accelerated if signs of inflation became evident. The next issue is emerging as not only whether to raise rates, but also how to set the pace and size of the increases.
Markets view the minutes as a clue for gauging the timing and size of additional rate hikes from the next meeting onward. While they could put upward pressure on yen interest rates, the prevailing view is that economic indicators and market trends before the next meeting will be influential because dissenting views remain.
The BOJ is at a stage of advancing monetary-policy normalization while assessing the cycle between prices and wages, and members share the view that prices will rise to levels above 2% from the second half of fiscal 2026 onward. Some members also said that underlying consumer-price inflation and service-price increases are likely to continue.