Bank of Japan Minutes Back Further Rate Hikes After September Move to 1.25%

Key Facts

Minutes of the September meeting showed that Bank of Japan policymakers saw a need to continue raising interest rates, while some pointed to the possibility of accelerating the pace of increases, according to a Reuters report published via MarketScreener. The views strengthened the likelihood of another increase in December, the report said. One board member said the bank might need to accelerate rate hikes if signs emerged that prices were deviating to the upside. The minutes followed the bank's September increase in its policy rate to 1.25%, the highest level in 31 years. At the time, the bank signalled a shift in its policy approach toward preventing inflation from exceeding its 2% target.

Board members did not share a single view: some considered a rate hike appropriate as underlying inflation approached the 2% price stability target, while others favoured keeping the current rate, according to the Bank of Japan minutes. The bank said underlying inflation "was more or less at 2%." Views at the meeting projected underlying inflation reaching a level generally consistent with the price stability target between the second half of fiscal 2026 and fiscal 2027. They also said economic activity and prices had generally evolved in line with the July 2026 Outlook for Economic Activity and Prices. The bank described financial conditions as accommodative.

At a later meeting in October, the Bank of Japan left its policy rate unchanged but remained alert to inflation risks, Reuters reported. The report said this reinforced market expectations of a rate hike in December. The bank's calendar sets 10 November for publication of the Summary of Opinions from the monetary policy meeting held on 29 and 30 October. The summary outlines views presented by policy board members and government representatives during the meeting and is edited by its chair. Japanese household income and spending data for September are also scheduled for release that day, according to the Statistics Bureau's calendar.

U.S. labor market data provide another backdrop for tracking the dollar and yen: nonfarm payrolls in the United States rose by 165,000 in October, while the unemployment rate was 4.1%, according to the Bureau of Labor Statistics. The bureau said the unemployment rate "changed little" during the month. These data alone do not determine the direction of the dollar/yen pair in the 9 November session. In EL7 data, the pair closed at 158.293 yen per dollar on 8 November. On 5 November, it ranged between 157.79 and 158.42, and stood at 158.18–158.20 at 17:00 Japan time, according to Bank of Japan data.

The next U.S. release on the calendar is the November jobs report, which the Bureau of Labor Statistics has scheduled for 4 December 2026. In Japan, the October meeting summary and household spending data are due on 10 November, according to the calendars of the Bank of Japan and the Statistics Bureau. The previous September summary showed differences among board members over the timing and pace of tightening, alongside inflation projections through fiscal 2027. The October decision also left the policy rate unchanged while keeping inflation risks under review. The December hike expectations cited in the report remain attributed to Reuters as market expectations.