BOJ Policymakers Back Further Rate Increases, Opinion Summary Shows

The BOJ held its policy rate at the October meeting after lifting it to 1.25% in September, the highest level since 1995. Economists and investors widely expect a further 25-basis-point increase at the bank’s final meeting of the year in December, with inflation remaining sticky.

One member said Japan had entered a “new phase” in which the BOJ should pick up the pace of moving the policy rate toward the neutral rate, which neither restrains nor stimulates economic growth. The member said companies were becoming more resilient to higher borrowing costs, the effects of earlier rate increases had yet to emerge and financial conditions remained accommodative.

The bank’s October outlook report said underlying inflation had reached its 2% target. Governor Kazuo Ueda called that a milestone, while describing the effort to sustain healthy price growth as a constant battle. The BOJ has identified the Middle East conflict, a weak yen and the artificial-intelligence boom as risks to its economic projections.

Another member called for moving toward a neutral rate soon, which would give the bank more flexibility to raise or lower rates as needed. A board member also urged officials to monitor financial conditions for several months after each hike and to “make haste slowly” in reducing monetary accommodation. The summary does not identify speakers by name.