BOJ Releases October Meeting Minutes
The Bank of Japan (BOJ) discussed the possibility of raising its policy rate to the level of the neutral interest rate at its Monetary Policy Meeting in October, according to the meeting minutes. Some policy board members argued that increasing the rate to the neutral level would help achieve stable long-term economic growth. Additionally, certain members analyzed that the recent depreciation of the yen could drive up import prices and inflate inflation.
According to Reuters on December 24, the BOJ stated in the October minutes, "Some policy board members said that, given the real interest rate is below the neutral rate, if the outlook for economic activity and prices materializes, they would continue to raise the policy rate in line with the principle of improving economic activity and prices."
The BOJ kept its policy rate unchanged at 0.5% in October. However, this month, it raised the rate by 0.25 percentage points, bringing the current policy rate to 0.75%. Notably, at the previous meeting, two board members expressed minority opinions in favor of a rate hike, which was interpreted as signaling the increase this month.
In the October minutes, most board members viewed that conditions were in place for wage increases, but ongoing uncertainty regarding the impact of high U.S. tariffs remains a variable. It was also noted that companies are seeking clearer answers on whether wage hikes will continue next year.
One board member who expressed a minority opinion stated, "It does not appear likely that the U.S. economy will slow significantly due to tariff policy," adding, "In Japan, the price stability target has already been largely achieved, so it is necessary to pay attention to the risk of price increases caused by yen depreciation."
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