Bank of Japan minutes detail September rate rise and inflation risk
Most policymakers saw a risk of underlying inflation exceeding 2%, while one member argued that another increase could hurt output, jobs and real income.
- The Bank of Japan's September minutes confirmed a 7-2 vote to raise the benchmark interest rate by a quarter-point to around 1.25%.
- The primary motivation for the rate hike was the risk that consumer price inflation could rise above the bank's 2% stability target.
- The decision was not unanimous, with one dissenting member concerned the increase could harm Japan's production, employment, and real income.
- The minutes also revealed a strategic shift in monetary policy, with the bank's focus moving from raising inflation to keeping it stable near the 2% target.
The Bank of Japan (BOJ) raised its benchmark short-term interbank rate to around 1.25% in a 7–2 vote at its 17–18 September 2026 meeting, according to minutes released on Thursday, 5 November 2026.
Most Policy Board members backed a quarter-point rise in the uncollateralised overnight call rate.
They saw a risk that underlying consumer price index (CPI) inflation could climb “above the price stability target” of 2%.
One member favoured keeping rates steady, arguing that another rise after the June 2026 increase could hurt “production, employment, and real income” in Japan.
Another argued that the bank would need to raise rates more quickly if there were signs of “an upward deviation in prices”.
Share prices and the yen also figured in the assessment.
A few members said financial conditions could look “more accommodative” once higher share prices and a weaker yen were taken into account.
One board member described the changing task facing the central bank as a “shift in the phase of monetary policy”.
The member noted that policy had previously aimed to lift underlying inflation while it was below 2%.
As inflation approached that level, keeping it close to 2% had become important, the member said.
[Copyright The Jiji Press, Ltd.]
