The latest Summary of Opinions from the BoJ’s December 18–19 meeting reinforced a clear tightening bias, with many policymakers arguing that the December rate hike should not mark the end of the cycle.
One opinion noted there was “still considerable distance” to neutral levels, explicitly calling for rate hikes at “intervals of a few months”. Another linked Yen weakness and rising long-term yields partly to the policy rate being too low relative to inflation, suggesting delayed normalization risks exacerbating financial distortions.
Inflation concerns featured prominently throughout the discussion. Several members described recent price pressures as “sticky”. One opinion highlighted spring wage negotiations as a key test, arguing that a third consecutive year of target-consistent wage growth would confirm underlying inflation has reached 2%.
Still, not all voices favored an aggressive path. Some policymakers urged caution, citing uncertainty around the neutral rate and shifting global rate environments. They argued flexibility should take precedence over targeting a specific policy level.
At the meeting, the BoJ raised its policy rate to a 30-year high of 0.75%.
