Key facts
- Some Bank of Japan board members suggested accelerating interest rate hikes in April.
- The proposed acceleration was linked to the potential prolongation of the Middle East conflict.
- Three out of nine board members proposed raising the policy rate to 1% in April.
- The BOJ later raised rates to 1% in June.
- Deputy Governor Ryozo Himino stated the BOJ will continue to raise rates, watching for inflation risks and currency moves.
Minutes released from the Bank of Japan's April meeting indicate that some members of the central bank's board expressed a desire for more aggressive interest rate increases. This sentiment was particularly noted in the context of a potentially prolonged Middle East conflict, with the aim of preempting any overshoot in underlying inflation. One specific member suggested that the pace of rate hikes should be accelerated, proposing increases as frequent as once every few months. Despite these calls, the Bank of Japan opted to keep its interest rates unchanged at the April meeting. However, the minutes revealed a division within the nine-member board, as three members voted in favor of raising the policy rate to 1%. This proposal was ultimately unsuccessful. The central bank did, however, implement a rate hike to 1% at a subsequent meeting held in June. Bank of Japan Deputy Governor Ryozo Himino stated on Friday that the central bank will continue to raise interest rates, closely watching for the risk of underlying inflation deviating upward from its 2% target. He also noted that the BOJ is monitoring currency moves as a key factor affecting the economy and inflation. Himino added that wholesale inflation was accelerating at a somewhat fast pace as companies pass on rising costs from the Middle East conflict, which could lead to broader price increases.