BOJ Debates Faster Rate Hikes Amid Inflation Risks

The Bank of Japan (BOJ) policymakers debated the need for faster interest rate hikes in July, according to minutes released on September 28. Many BOJ members saw the mounting inflation risks as a reason to focus on anchoring underlying inflation around its 2% target.

Some policymakers called for faster interest rate increases, with one member stating that 'markets appeared to be expecting the BOJ to raise interest rates with intervals of about six months. But the pace of rate hikes could be faster than such market expectations, given underlying inflation had approached 2% and the greater need to focus on upside price risks.'

A different member warned that the BOJ must pay particular attention to upside price risks and 'adjust its policy rate nimbly.' Another member stated that the risk of waiting was no longer marginal, warning that the economy will face huge damage if inflation risks materialise.