BOJ Policymakers Discuss Accelerating Rate Hikes to Prevent Inflation Overshoot

Bank of Japan (BOJ) policymakers are sounding more hawkish than usual after September's rate hike, which pushed borrowing costs to a 31-year high. According to the BOJ's meeting summary released Thursday, some officials want to accelerate the pace of rate hikes if prices start drifting above their target.

One member suggested that the BOJ may need to 'accelerate the pace of rate hikes' if prices exceed expectations, while another argued it's 'desirable' to move rates closer to the BOJ's goal soon. This shift in tone is consistent with Governor's previous signal after September's decision, which indicated that the BOJ is focusing on preventing inflation from overshooting.

The urgency behind this move stems from policymakers believing that underlying inflation is nearing 2%, a key condition for rate hikes. By increasing rates now while the economy remains stable, they hope to give themselves more room to cut rates later if growth weakens.

However, not all officials agree on the need for faster rate hikes. At least one voice warned against moving too quickly, indicating that the path forward is not yet locked in.