BoJ's Summary of opinions noted that one member said financial conditions remain accommodative even after a rate hike in December

Says:

• One member said no need to worry too much about impact on corporate profits as long as rate hike pace is not too fast.


• One member says appropriate to continue raising policy rate if economic and price projections materialise.


• A member said current financial conditions still significantly accommodative judging from economic strength and fallout from recent weak yen.


• A member said if overseas rate environments change this year, there is risk BOJ may unintentionally fall behind a curve.


• A member said that the bank has been examining response of economic activity and prices and financial conditions to each rate hike and has been raising the policy interest rate, while it is appropriate for the bank to continue to do so.


• One member said BoJ should raise the policy rate at intervals of a few months.


• One member said some indicators of long-term inflation expectations have already started to show stability.

Analysis details (00:05)

As a reminder, the BoJ kept its short-term policy rate unchanged at 0.75%, as widely expected, during the January meeting with the decision split 8–1, as board member Takata voted for a 25bp hike. The BoJ reiterated that real interest rates remain significantly low and reaffirmed its intention to continue raising the policy rate and adjusting the degree of monetary accommodation if the outlook for growth and prices is realised, consistent with achieving the 2% inflation target in a sustainable and stable manner. Financial conditions were described as accommodative, with private consumption remaining resilient, supported by improving employment and income trends despite ongoing price pressures. Business fixed investment continues on a moderate upward path, while corporate profits remain high overall, although manufacturing is facing headwinds from higher tariffs. Exports and industrial production were characterised as broadly flat, reflecting the impact of increased US tariffs, but the Bank expects Japan’s economy to continue growing moderately as overseas economies return to a growth path. On inflation, medium- to long-term inflation expectations were seen rising moderately, with underlying CPI inflation continuing to increase gradually. While core CPI is expected to slow below 2% in the first half of the year from around 2.5% recently, the BoJ maintained that the wage–price interaction will be sustained, allowing inflation to align with the 2% target in the second half of the projection period. Labour market conditions are expected to tighten further, with labour shortages supporting relatively strong nominal wage growth, aided by this year’s spring wage negotiations. Risks to growth and prices were judged broadly balanced, though uncertainties remain around geopolitics, China’s growth outlook and the impact of US tariffs on global activity, while the BoJ again stressed that exchange rate movements are now more likely to feed through to prices. In the Outlook Report, real GDP forecasts were revised up for FY2025 to 0.9% and FY2026 to 1.0%, while FY2027 was trimmed to 0.8%, while core CPI forecasts were unchanged at 2.7% for FY2025, edged up to 1.9% for FY2026 and held at 2.0% for FY2027.

01 Feb 2026 - 23:50- MetalsData- Source: Market Source