BOJ Shifts Focus to Anchoring Inflation at 2%

The Bank of Japan's July meeting minutes revealed a shift in policy towards anchoring inflation at around 2%, rather than pushing prices higher. The underlying inflation rate is approaching this target, and several board members called for accelerating the pace of rate hikes.

The BOJ held the policy interest rate at 1% in July, but raised it to 1.25% in September, the highest level in approximately 31 years. One member noted that markets expect the BOJ to raise rates every six months, but given the approaching inflation target, the pace of hikes could be faster than expected.

Another member emphasized the need for nimble adjustments to the policy interest rate to address upside risks. Yet another warned that waiting too long to raise rates could lead to severe damage if inflation risks materialize.