BOJ signals accelerated rate tightening amid persistent inflation risks

The summary of opinions from the BOJ’s September meeting revealed increased backing for continued monetary tightening, with several members advocating for faster rate hikes or bringing rates closer to the neutral target in the near term.

Multiple policymakers noted that underlying inflation is approaching or at the 2% target, warning of ongoing price pressures and upside risks from elevated crude oil prices linked to Middle East tensions. One member suggested accelerating tightening if inflation risks overshooting forecasts.

Following September's rate hike to 1.25%, the BOJ governor emphasized a heightened focus on preventing inflation from overshooting the central bank's targets.

Despite potential monetary tightening, the Nikkei 225 Index jumped 2.4% to above 68,000 on Thursday, advancing for a second straight session to its highest level in six weeks. Meanwhile, the Japanese yen weakened past 158 per dollar.