Some Bank of Japan members advocate accelerating rate hikes, while dovish members warn of weak consumption.

(1) The summary of opinions from the Bank of Japan's September meeting indicates that some policymakers believe it is necessary to accelerate rate hikes or bring interest rates closer to the central bank’s “target” as soon as possible, reinforcing the prospect of further hikes. (2) The majority view was that even after the September rate hike, borrowing costs still need to be raised due to escalating inflationary pressures. One committee member stated that the central bank should bring the policy rate closer to its target in a relatively short period, allowing leeway to address unexpected economic developments. (3) The core inflation rate has reached or is nearing the central bank’s 2% target. In September, the Bank of Japan raised interest rates to a 31-year high of 1.25%, and the governor hinted at entering a new phase focused on preventing excessive inflation. Many analysts expect another rate hike in October or December. (4) One member warned that, given significant upside risks to prices, the central bank should continue to raise rates in a timely manner, without being overly cautious, and strengthen analysis of the neutral rate estimate. After the summary of opinions was released, the USD/JPY rose to around 157.87, as investors trimmed bets on a second consecutive rate hike in October. (5) Dovish opposition: Of the nine-member Policy Committee, Takehiro Asada and Ayano Sato opposed the September rate hike, warning of weak consumption and sluggish service sector inflation, and argued that the current policy should be maintained. (6) The Cabinet Office representative urged the Bank of Japan to carefully examine the cumulative effects of past rate hikes and expressed concern that further hikes could impact the economy. Minister of Economic and Fiscal Policy Makoto Kinochi has attended on behalf of the Cabinet Office, is considered a member of Prime Minister Sanae Takaichi’s reflationist team, and Takaichi remains cautious about rate hikes.