BOJ debated faster rate hikes in September, government pushed back

The Bank of Japan's (BOJ) September meeting revealed some policymakers envisioning quicker interest rate hikes or bringing them closer to the central bank's goals, potentially leading to more hikes. However, the government representative cautioned the BOJ to exercise caution in further rate increases. A quarterly survey published on October 1 indicated that inflation expectations were not yet escalating, dampening hopes for an October rate hike.

The BOJ had already raised rates to a 31-year high of 1.25% during that meeting, with the governor emphasizing a new phase focused on controlling inflation from surging past its target. Analysts projected another hike either in October or December. Despite this, some opinions in the summary advised the BOJ to maintain a steady approach to rate hikes, considering the potential downside risks to the economy.