Bank of Japan Meeting Minutes: Deflationary History Becomes an Obstacle to Rate Hikes

Jinse Finance reported that, according to the minutes of the Bank of Japan's September meeting released on Wednesday, some committee members, when discussing the timing of a rate hike, cited Japan's long-term experience with deflation and believed it was necessary to remain cautious, which contrasted with two members who called for a rate increase. The minutes stated: "A minority of members believed that, when weighing the costs and benefits of waiting, it is necessary to take into account that Japan has experienced long-term deflation." According to the minutes, one member said: "The Bank of Japan's monetary policy needs to be distinguished from other central banks and given special consideration, which is to anchor inflation expectations at 2%." These minutes reveal the intensity of the discussions at the September policy meeting. At this meeting, Governor Kazuo Ueda faced, for the first time, two votes against maintaining the current interest rate. Although the written record overall emphasized the possibility of a rate hike in the near future, it also clearly pointed out that Japan's more than ten years of deflation experience is causing some members to remain cautious and wait for more supporting data. As the Bank of Japan is set to make its next policy decision on December 19, market observers will closely watch how much the authorities will signal the possibility of a rate hike at that time, as the Bank of Japan seeks to avoid causing shocks to financial markets.