BOJ Hints at Accelerating Rate Hikes Amid Rising Inflation

The Bank of Japan's (BOJ) latest policy meeting has revealed that there may be an acceleration in interest rate hikes, with at least three board members suggesting a faster pace than currently anticipated.

In its summary of opinions from the July 30-31 meeting, the BOJ released comments indicating growing support for a more aggressive tightening cycle. One member noted that the underlying Consumer Price Index (CPI) inflation has been approaching 2% and that greater consideration should be given to upside price risks than before.

This could result in a faster pace of policy interest rate hikes, which might catch markets off guard. Another member argued that the BOJ should accelerate its adjustment to match the degree of monetary accommodation, while a third member urged the central bank to avoid following a predetermined hiking schedule and instead signal clearly that it would respond to prevent upward deviation in prices.

The BOJ has already signaled its potential for rate hikes in September, closely monitoring the impact on economic growth and prices. Meanwhile, Japan's core inflation rate stood at 1.6% in July.