Minutes from the Bank of Japan’s latest board meeting suggest that an interest rate increase could take place as early as December, in line with widespread market expectations, as several board members indicated that the conditions for further policy normalization have nearly been met.
Meanwhile, they emphasized the importance of closely monitoring underlying inflation trends. Notably, the board voted 7-2 to keep rates steady at 0.5% during the meeting on October 30.
Governor Kazuo Ueda has recently signaled that a rate hike could come in the next few months, prompting speculation about whether the move will occur at the December 19 meeting or be delayed until the start of next year.
The document also signaled a shift in focus toward the annual wage negotiations set to begin later this year. One board member highlighted the need to observe the initial momentum of these talks, particularly after uncertainty around U.S. tariffs has eased. This aligns with Ueda’s earlier statements that a clearer picture may emerge by the end of this year or early next year as wage and employment figures become available.
The October meeting marked the first since Prime Minister Sanae Takaichi, known for her support of monetary easing, assumed office on October 21. Some economists believe her appointment could mean further caution on rate hikes due to political considerations. Japan’s new Fiscal and Economic Policy Minister, Minoru Kiuchi, also attended the meeting in an official government capacity.
According to a recent Bloomberg survey, about half of analysts expect a hike in December, while nearly all anticipate the move by January.
One board member noted that if global and domestic conditions remain stable and wage-setting by firms stays strong, this could support a policy change.
