Many members of the board observed that underlying inflation is nearing 2%, marking a shift in strategy toward stabilizing price growth rather than pushing it upward. While some officials expressed difficulty in anticipating the exact timing of future hikes, they noted that markets' expectations of one increase every six months may be too slow. Upside risks persist due to a weak yen and Middle East events, which have increased the pass-through of import costs to consumers and firms, leading some to warn that term premia could rise if rate hikes are deemed inadequate.
Wednesday, October 21, 2026
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BOJ Ends Era of Pushing Up Inflation to Focus on Stable 2% Target
Global Markets23 days ago
The Bank of Japan must accelerate interest rate hikes to prevent upside inflation risks from causing significant economic harm, one policymaker stated in meeting minutes from July. This official argued the bank needs to make nimble policy decisions by raising the borrowing cost, which currently remains below the estimated neutral rate range. Additional notes in the minutes indicate that a rate hike's effect on the economy and inflation typically takes 1 to 1.5 years to materialize, while a Cabinet Office official urged the bank to collaborate with the government to ensure monetary policy supports stable prices.
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