FX.co ★ BoJ Sees Case for Further Rate Hikes: September Minutes

According to minutes from its September meeting, the Bank of Japan judged it appropriate to continue raising interest rates and to recalibrate the degree of monetary accommodation in line with developments in economic activity, prices, and financial conditions. Members agreed that the timing and pace of any further adjustments should depend on the likelihood of achieving the Bank’s baseline outlook for growth and inflation, while carefully monitoring risks such as the situation in the Middle East, expanding AI-related demand, and foreign exchange movements. They also underscored the growing importance of anchoring underlying CPI inflation around the 2% target to avoid an excessive overshoot that could damage the economy. One member observed that monetary policy had entered a new phase—shifting from fostering higher underlying inflation to maintaining price stability through flexible responses to changes in domestic and global economic conditions, including exchange-rate-driven price pressures.