Bank of Japan releases September policy meeting minutes

The Bank of Japan has released the full minutes from its September 17 and 18 policy meeting, detailing the internal debate surrounding a 25 basis point interest rate hike that brought the policy rate to 1.25%, the highest level since 1995.

The minutes reveal a split board, with two members, Toichiro Asada and Ayano Sato, voting to maintain the rate at 1%. Asada cited concerns regarding core inflation remaining below 2% and the economy's capacity to absorb increases, while Sato noted a lack of momentum in consumption and underlying inflation.

Members also expressed concerns regarding upside inflation risks, specifically noting that rising crude oil prices could sustain inflationary pressures. This follows a period where the bank flagged risks from soaring fuel costs, rising import costs due to a weak yen, and strong demand from the AI sector. The documents provide context on how the majority weighed the pace of tightening as the rate entered the bank's estimated neutral range.