BOJ Minutes Fuel Hawkish Sentiment Ahead of Next Rate Hike
The Bank of Japan (BOJ) struck a hawkish tone in its July policy meeting minutes, signaling a shift away from targeting 2% underlying consumer price inflation and toward anchoring it at around that level.
According to the minutes, board members agreed that with financial conditions still accommodative, the BOJ should continue raising its policy rate and adjust the degree of monetary easing in line with economic activity, prices, and financial conditions.
Some members expressed concerns about overshooting inflation targets, while others emphasized the need for a timely response to rising prices. One member warned that failing to respond appropriately would lead to a 'double shock' on borrowers already facing high prices with heavier debt-servicing pressure.
The hawkish consensus is seen as having led to the rate increase to 1.25% at the BOJ's policy meeting on the 17th and 18th of this month, and some analysts now expect a further hike in October.