BOJ Hawks Gain Momentum Amidst Rising Inflation Pressure

The Bank of Japan (BOJ) is facing increasing pressure to raise interest rates again after its September increase to 1.25%, a 31-year high.

A summary of opinions from the September meeting showed some policymakers saw a need to accelerate the pace of rate rises, while most favoured following September's hike with further increases as inflationary pressure builds.

The BOJ's hawks, who support higher interest rates, are gaining momentum, driven by strong business confidence in Japan. The tankan survey, which measures business sentiment, showed large manufacturers at +24, the highest since March 2018, while firms forecast inflation of 2.6% in three years and 2.5% in five.

However, not everyone agrees on the timing of further rate hikes. Two doves on the BOJ board, Toichiro Asada and Ayano Sato, dissented from September's decision, warning of weak consumption and subdued services inflation.