BOJ Cautious on Rate Hikes Amid Internal Divisions and Weak Consumption
The Bank of Japan (BOJ) is showing signs of caution when it comes to further rate hikes, according to a recent report from Rabobank Research Global Economics & Markets. The BOJ's September meeting notes revealed internal divisions and concerns over weak private consumption, with some members urging the bank to weigh the cumulative impact of past rate increases.
While there are still hawks within the BOJ who advocate for rapid rate hikes, others are warning against hasty action due to the risks associated with tightening. The report notes that government representatives are also urging caution and emphasizing the need to balance growth and tightening risks.
The latest Tankan survey showed that large manufacturers are experiencing their most upbeat sentiment since 2018, which may put pressure on the BOJ to raise rates further. However, it remains to be seen whether the bank will choose to do so.