Minutes released Nov. 5 show two Bank of Japan (BOJ) Policy Board members opposed September’s rate increase, exposing disagreement over whether economic and price conditions supported tighter monetary policy.
The board raised its guideline for the uncollateralized overnight call rate by 0.25 percentage point, to around 1.25%. The new level took effect Sept. 24.
Policy Board member Toichiro Asada cited a consumer price index rate below 2% and questioned whether the economy was strong enough to justify an increase. Policy Board member Ayano Sato said economic and price developments had not accelerated substantially, according to the minutes.
The BOJ described Japan’s economy as recovering moderately, although some weakness was linked in part to the situation in the Middle East. The Bank said AI-related demand was helping exports, production and corporate profits, while higher energy and raw-material costs weighed on the outlook.
Most board members saw underlying inflation nearing 2% alongside accommodative financial conditions, and judged further increases appropriate. They said the timing and pace should reflect the outlook for activity and prices, financial conditions and risks. Those included developments in the Middle East, demand related to AI and foreign-exchange movements.
Policy Board members Takata Hajime and Tamura Naoki challenged parts of the policy statement’s price assessment. The minutes say they considered underlying inflation to have broadly reached the 2% target. The board approved the statement unanimously.
Asada warned that another increase could weigh on production, employment and real income. The BOJ’s decision document said it expected accommodative financial conditions to continue aiding economic activity after the adjustment. The Bank lists its next Monetary Policy Meeting for Dec. 17-18, 2026.
