BOJ Remains on Track to Hike Rates Hikes, Opinion Summary Shows

By Megumi Fujikawa

TOKYO--Bank of Japan policymakers continued to see a need to raise interest rates at their last meeting in April, even as they remained cautious about how the Middle East conflict will affect Japan's economy.

A summary of opinions expressed by the BOJ policy board shows that the central bank has grown increasingly concerned about a potential rise in underlying inflation stemming from war-driven disruptions to oil and gas prices.

But with the fallout from the conflict also threatening to derail Japan's economic recovery, analysts expect the BOJ to tread carefully in deciding the timing of its next rate hike.

"The situation in the Middle East remains unclear, and the current circumstances do not suggest a pressing need to quickly raise the policy interest rate," one policy board member was quoted as saying in the summary of the bank's April 27-28 meeting.

"However, given that the impact on Japan's economy will become apparent to some degree, it is quite possible that the bank will raise the policy interest rate from the next MPM [monetary policy meeting] onward, even if the future course of the situation in the Middle East remains unclear," the member added.

The summary, released Tuesday, doesn't identify speakers.

Last month, the BOJ kept its policy rate unchanged at 0.75% amid intense geopolitical uncertainty, and raised its inflation forecasts to reflect higher crude prices.

One member floated the idea of raising the policy rate every few months, with the possibility that the bank might have to accelerate the pace of tightening if inflationary risks increase.

"A further rise in domestic distribution costs due to the surge in fuel costs cannot be avoided, and this could bring forward the timing for underlying CPI [consumer price index] inflation to reach 2%," a board member said.

There was also an opinion that the surge in crude oil prices could push up not only energy costs but also prices of a wide range of items.

"Since the main risk factor for a downward deviation in economic activity is a rise in prices, the bank should make it a priority to carry out its mission as the guardian of price stability and thereby contain a downward deviation of economic activity," one member said.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

May 11, 2026 21:06 ET (01:06 GMT)