BOJ Schedules July Meeting to Allow Hawkish Votes Before Board Shake-Up

The Bank of Japan (BOJ) has scheduled its next year's July policy meeting for July 21-22, allowing two hawkish board members to cast their votes before their terms expire. This timing could be crucial in determining how high Japanese interest rates may ultimately rise.

Hawkish board members Naoki Tamura and Hajime Takata, who are advocates of faster interest rate hikes, will have a chance to vote on the 21st and 22nd, just before their five-year terms end on July 23. This scheduling quirk has drawn attention because it preserves the BOJ's ability to deliver a rate hike before a board reshuffle that could make future tightening harder.

The BOJ typically holds its July meetings toward the end of the month, but this year's meeting will take place earlier in the month. The central bank has not disclosed the reasons behind this decision, but sources suggest it may be an attempt to squeeze in a hike before the board reshuffle.

Under the current phase of normalization, the BOJ has hiked rates at a pace of roughly twice a year. To reach a policy rate of 1.75% or 2%, the central bank would need to lift its current 1% policy rate three or four more times, raising the stakes around next year's board reshuffle.