BoJ Summary of Opinions: Member says appropriate to keep raising rates in line with economy, price

The Bank of Japan published the Summary of Opinions from its September monetary policy meeting, highlighting various members' views on rate hikes and inflation. One member suggested maintaining rate hikes in line with the economy and price developments, while another stated that the central bank's policy phase has shifted, focusing on anchoring underlying inflation near 2%.

A member emphasized the need for the BoJ to act swiftly and demonstrate determination to prevent inflation overshoot and consider its impact on the foreign exchange market. Another member advocated for accelerating rate increases if inflation surpasses the target. The sentiment among big manufacturers reached its highest level since March 2018.

One member proposed early rate hikes to respond to unexpected economic and price changes. However, another member cautioned against a rushed approach, urging proper policy guidance as underlying inflation is expected to reach 2% soon. One member argued that the central bank should not be overly cautious in raising rates due to significant upside risks to inflation.

Some members noted that the terminal rate could potentially exceed estimated ranges, depending on overseas developments. Most firms reported that the impact of past and further rate hikes is likely to be limited. The financial conditions remain accommodative, according to one member. The government expects the central bank to uphold accountability and carefully assess the cumulative impact of previous rate increases.

The cabinet office representative suggested that the BoJ may need to consider its neutral rate estimates and take proactive measures during economic or market fluctuations. The government expects the central bank to conduct monetary policy appropriately to achieve price stability while closely cooperating with the government. One member pointed out that Q2 GDP data was somewhat weak, attributed to technical factors.

Another member highlighted a significant shift in Japan's financial conditions, with rising upward price pressures becoming more apparent in recent months. The member also stated that underlying inflation is close to 2%, and the policy focus should be anchoring it at that level while monitoring price movements and subsequent developments.

Core inflation has generally hit 2%, and some members believe that upside risks to prices remain elevated. The central bank must consider the price outlook amid the possibility of sustained high crude oil prices. Private consumption has remained subdued, with an increase in services prices largely stable recently. The USD/JPY pair trades slightly higher at approximately 157.60 at press time.

Japan's central bank has shifted from ultra-loose monetary policy to a more cautious stance amid rising inflation concerns.