FX.co ★ BoJ Nears Next Rate Move But Keeps Cautious Tone: Oct. Summary of Opinions

The Bank of Japan has indicated the potential for a gradual increase in interest rates as economic activity and price levels show signs of improvement. However, they stressed the need for caution due to ongoing uncertainties, based on insights from their October meeting. The central bank asserted the importance of evaluating growth and inflation forecasts without any fixed assumptions. While wage increases are anticipated in the coming year, rising costs in living and construction imply that household budgets will continue to be strained. Policymakers observed that "the conditions for progressing towards normalization are nearly complete," yet they advocated for a careful assessment of how deeply inflation is rooted. Some members argued for earlier measures to mitigate risks from a depreciating yen or a robust U.S. economy, whereas others expressed concerns about potential vulnerabilities if U.S. markets weaken. The board ultimately decided that although the moment for a rate increase is approaching, it is wise to remain cautious and proceed gradually towards a neutral monetary policy stance.