FX.co ★ BOJ Open to Hikes as Growth and Inflation Hold: June Minutes

According to the minutes from its June meeting, the Bank of Japan plans to increase interest rates further if economic growth and inflation align with forecasts. While the majority of members preferred maintaining the current rate due to uncertainties surrounding U.S. trade tariffs, one member expressed support for keeping rates unchanged indefinitely, citing concerns over sluggish growth and inflation. Nonetheless, most members, including Governor Kazuo Ueda, supported the prospect of future rate hikes, expecting the economy to improve in the medium term. This perspective was reaffirmed during the July meeting, where the Bank held rates steady at 0.5% but indicated a willingness to increase them should inflation and growth advance. Inflation has been largely driven by escalating food prices, particularly rice, and increased wages, which have stimulated consumer spending. Additionally, the Bank of Japan announced plans for a gradual reduction in bond purchases starting in 2026, attributing the decision to enduring economic uncertainties.