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BOJ minutes show shift from raising inflation to preventing overshoot

The July minutes also document internal disagreement on tightening pace, including a proposal to lift the policy rate to 1.25% that was rejected 8 to 1.

Reported · Written up by our desk · Central Banks

The Bank of Japan’s July 30 to 31 meeting minutes, as covered by Action Forex, show policymakers had already started moving away from trying to raise inflation toward preventing it from overshooting their target before a September rate hike.

In those minutes, the BOJ kept its policy rate at 1.0% in July, while members said underlying inflation was nearing 2% and financial conditions remained accommodative.

The minutes describe a broader debate on how quickly to tighten, with one member arguing hikes could be faster than market expectations as upside inflation risks grew, while another urged the BOJ to adjust rates nimbly.

Action Forex also notes that although there was discussion of changing course, the board was not ready to move as a whole, rejecting Hajime Takata’s proposal to raise the policy rate to 1.25% by a vote of 8 to 1.

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