BoJ kept its uncollateralized overnight call rate unchanged at 0.25%, as widely anticipated, with an 8-1 vote in favor. Naoki Tamura dissented, advocating for a rate increase to 0.50%.
Governor Kazuo Ueda, speaking at the post-meeting press conference, reiterated that rate hikes would proceed cautiously. He noted, “If the economy and prices move in line with our forecast, we will continue to raise our policy rate,” but emphasized the need to carefully assess data before adjusting the level of monetary support.
The gradual pace of tightening, he explained, is due to the “moderate” rise in underlying inflation, which lacks the strength to warrant aggressive moves.
Ueda highlighted the importance of monitoring wage dynamics, particularly in the context of next year’s wage negotiations, to gauge the strength of Japan’s wage-inflation cycle.
He also pointed to uncertainties in the global economic outlook and the impacts of policy decisions under the incoming U.S. administration, despite the overall resilience of the US economy.
