BOJ Policymakers Eye Faster Rate Hikes Amid Inflation Risks

The Bank of Japan's July meeting minutes reveal a stronger focus on containing upside price pressures as underlying inflation nears the 2% target. Several policymakers see mounting inflation risks necessitating a shift toward tighter monetary policy.

The BOJ raised its policy rate to a 31-year high of 1.25% in September after keeping borrowing costs low for an extended period, marking a faster tightening path. Higher import costs driven by the Middle East conflict and a weak yen are strengthening the BOJ's commitment to tightening and keeping further rate hikes under consideration.

Jurors at the July meeting debate pointed to a firmer tightening bias, with several members arguing that the BOJ must pay particular attention to upside price risks and adjust its policy rate nimbly. One member warns that waiting for inflation risks to materialise would result in heavy damage to the economy.