BoJ September minutes: hike to around 1.25% passed 7-2, Asada and Sato voted to hold
Serguey Asael Shinder2 min readThe Bank of Japan released the minutes of its 17-18 September Monetary Policy Meeting on 5 November, after the Policy Board approved them at its 29-30 October meeting.
At the September meeting the board raised its policy rate by 0.25 percentage points, guiding the uncollateralised overnight call rate to around 1.25 percent. The interest rate on the complementary deposit facility was set at 1.25 percent and the basic loan rate raised to 1.5 percent. Seven members voted for the guideline: Governor Ueda, Deputy Governors Himino and Uchida, and Takata, Tamura, Koeda and Masu. Asada Toichiro and Sato Ayano voted against.
The minutes record their reasons. Asada argued that with CPI excluding fresh food rising by less than 2 percent recently, the economy could not necessarily be called strong, and it was desirable to keep the guideline unchanged. Sato considered that economic and price developments did not appear to have accelerated substantially compared with before, so a hike was not appropriate at that time.
The majority view, as summarised, was that a hike was appropriate for the sustainable and stable achievement of the 2 percent target. One member explained the timing: developments were largely on track; the references used to judge it, namely the situation in the Middle East, AI-related demand and foreign-exchange movements, continued to warrant attention as factors that could raise prices; and financial conditions had not changed significantly since the previous hike and appeared accommodative. In the intermeeting period the call rate had traded between 0.976 and 0.980 percent and JGB purchases ran at about 2.5 trillion yen a month.
What it means
Two dissents on a hike are a signal that the board's next move will be argued, not assumed. The majority's own checklist names the yen as one of three triggers, which keeps currency moves in the BoJ's reaction function.