At its policy meeting on 18 September, the Bank of Japan implemented another rate hike and made clear its intention to continue raising rates at a high level. At the same time, reports that 2 Policy Board members opposed the decision leave the outlook for the pace of future hikes uncertain.
The Bank of Japan decided to raise interest rates again at an unusually short interval of 3 months. The run-up to the decision was turbulent, including statements and actions that were perceived as demands from the United States for a rate hike.
The BOJ signaled a positive stance toward further rate hikes, but it remains unclear whether this pace can continue. In addition to growing inflation concerns, developments at the ECB and the Federal Reserve have fueled expectations that the BOJ will accelerate the pace of rate hikes. Some market participants also believe it will become more difficult to refer to correcting yen depreciation.
Governor Kazuo Ueda (植田和男) stressed that the BOJ would continue raising its policy rate. Although the rate has moved above the lower end of the neutral-rate range, the BOJ signaled its intention to continue raising rates. At the same time, opposition from 2 Policy Board members may be casting a shadow over future policy decisions.