The Bank of Japan (BoJ) published the Summary of Opinions from the September monetary policy meeting, with the key findings noted below.

Key quotes

One member said appropriate to keep raising rates in line with economy, price, financial developments.

One member says policy phase shifted, focus must be on anchoring underlying inflation near 2%.
One member said BoJ must act nimbly, show market determination to prevent inflation overshoot and consider impact on FX market.
One member said central bank must accelerate rate increases if inflation exceeds target.
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One member said central bank must raise rates early to terminal to respond swiftly to unexpected economic, price changes.
One member said no need to rush raising rates but must guide policy properly as underlying inflation likely to hit 2% soon.
One member said central bank shouldn't be overly cautious in raising rates given significant upside risks to inflation.
One member said chance terminal rate could exceed estimated range, market expectations, depending on overseas developments.
One member said most firms report impact of past and further rate hikes likely limited.
One member says financial conditions continue to be accommodative.
Cabinet office rep says govt expects central bank to uphold accountability, carefully assess cumulative impact of previous rate increases.
Cabinet office rep says BoJ may need to consider its neutral rate estimates.
Cabinet office rep says central bank must take proactive, appropriate measures during excessive economic or market fluctuations.
Cabinet office rep says govt expects central bank to conduct monetary policy appropriately to stably achieve price target while closely cooperating with govt.
One member noted somewhat weak Q2 GDP data attributed to technical factors.
One member noted significant shift in Japan's financial conditions with rising upward price pressures becoming more apparent over recent months.
One member said underlying inflation is close to 2%, focus of policy should be anchoring it at that level and monitoring price moves, subsequent development.
One member said core inflation has generally hit 2%.
One member said upside risks to prices remain elevated.
One member says central bank must consider price outlook amid possibility of sustained high crude oil prices.
One member noted private consumption has stayed subdued, increase in services prices largely stable recently.

Market reaction

At press time, the USD/JPY pair trades 0.03% higher at around 157.60.

Bank of Japan FAQs

The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.