BOJ Policymakers Weigh Faster Rate Hikes Amid Inflation Risks

The Bank of Japan (BOJ) policy meeting minutes from July revealed growing concerns among policymakers about mounting inflation risks. Some members called for faster interest rate increases, citing the need to focus on upside price risks and anchor underlying inflation around its 2% target.

The BOJ kept interest rates steady at 1% in July but warned of the risk of exceeding its inflation target. The minutes showed that many members projected rising wholesale prices spreading to broader-based inflation and highlighted long-term inflation expectations were heightening for both households and companies.

Analysts expect the BOJ to revise up its inflation forecasts in a quarterly report due at its next policy meeting on October 29-30 and hike rates again as soon as October or December. The benchmark interest rate has risen to a 31-year high of 1.25% this month, with some predicting further hikes could push it above 3%.