BOJ summary shows split over whether to raise rates further after inflation reaches 2% target

The Bank of Japan’s newly released summary of opinions from its Oct. 29-30 policy meeting showed a clearer split inside the board over the next interest-rate move, with a majority favoring a pause at 1.25% to gauge the effect of earlier hikes while some members argued for continuing to raise rates. The document, released Tuesday at 8:50 a.m. JST, offers the clearest official account yet of how policymakers are weighing further tightening as inflation firms around the central bank’s target.

At the Oct. 29-30 meeting, the BOJ kept its policy-rate guideline unchanged in an 8-1 vote, deciding that “The Bank will encourage the uncollateralized overnight call rate to remain at around 1.25 percent.” The lone dissent came from board member Hajime Takata, who proposed guiding the overnight call rate to around 1.5% instead. His proposal was defeated.

The new summary shows most members preferred to wait after the BOJ’s September rate increase, saying it was “appropriate for the Bank to maintain the current policy interest rate at this MPM to assess the cumulative effects of past rate hikes.” But the document also showed some members thought additional increases were warranted because inflation conditions had changed. That debate mattered because, at the same meeting, the BOJ said: “Underlying CPI inflation is at a level that is generally consistent with the price stability target of 2 percent.” That assessment is a notable milestone in Japan’s long exit from ultraeasy monetary policy, because it strengthens the case for further rate increases even though the board chose to hold in October.

The BOJ’s October 2026 Outlook Report underscored that backdrop. The median forecast by policy board members for consumer inflation, excluding fresh food, was 2.5% for fiscal 2026, 2.6% for fiscal 2027 and 2.0% for fiscal 2028. Those projections suggest inflation is expected to stay at or above the BOJ’s 2% target through the forecast horizon before settling at target.

The Oct. 29-30 meeting also produced a separate unanimous decision on the BOJ’s balance sheet, another sign of policy normalization after years of massive asset purchases. The central bank said it would step up the pace of exchange-traded fund sales from about 330 billion yen a year to about 860 billion yen a year on a book-value basis starting in January 2027. In its statement, the BOJ said, “The Bank … decided to sell its ETF holdings at a scale of about 0.1 percent of the trading value in the market, and set the pace of sales at about 860 billion yen per year (on a book value basis).” The bank said ETF sales, which began in January 2026, had proceeded smoothly and that it would adjust or suspend sales if market conditions required.

The immediate context for the split is that the BOJ had already raised its short-term policy-rate guideline to around 1.25% at its Sept. 17-18 meeting, with the change taking effect Sept. 24. The October meeting was therefore a hold after the latest increase, but the new summary suggests a more visible divide over how soon tightening should resume. The BOJ’s next scheduled policy meeting is Dec. 17-18, and full minutes from the Oct. 29-30 meeting are due Dec. 23.