BOJ Hawks Gain Momentum as Inflation Fears Mount

The Bank of Japan's case for a September rate hike has strengthened after a growing number of policymakers argued for a more forceful response to mounting inflation risks, a summary of opinions at their July meeting showed.

At least three board members said the BOJ could raise rates more quickly than its current pace of roughly two increases a year, highlighting growing alarm that the bank risks falling behind the curve on inflation.

The summary's hawkish tone reinforces market expectations for a rate hike as soon as September, following a nudge from U.S. Treasury Scott Bessent and joint intervention by Tokyo and Washington to prop up the yen, analysts say.

One member noted that 'given we must pay attention to the risk of an inflation overshoot more than before, the pace of rate hikes could be faster than markets expect.' Another said the focus has shifted from pushing up underlying inflation to preventing it from overshooting.