BOJ Members Signal Push for Regular Rate Hikes to Control Inflation

By Megumi Fujikawa

TOKYO--Opinions from the Bank of Japan's last meeting show a growing sense of worry about inflation and a need to lift interest rates at a steady pace to avoid falling behind the curve.

The summary captures the views expressed at the central bank's June meeting, where it raised its policy rate to a 31-year high, and will likely firm already-strong expectations of further tightening ahead.

"To avoid rapid and significant policy interest rate hikes, the bank should bring the policy rate closer to the neutral rate sooner," one policy board member was quoted as saying in the summary released Wednesday.

The member added that the BOJ should consider further action every few months.

In deciding to raise the policy rate to 1% from 0.75% last week, the central bank warned that underlying inflation could exceed its 2% target due to higher oil prices caused by the conflict in the Middle East. BOJ Deputy Gov. Shinichi Uchida then reaffirmed the bank's stance of seeking further monetary tightening at the post-meeting news conference.

Markets expect the bank to carry out at least one more rate hike by the end of the year.

"Unlike in the United States and Europe, Japan's policy interest rate remains below the estimated range of the neutral interest rate," one BOJ board member said, according to the summary, which doesn't identify speakers.

Some policymakers seem to believe that war-induced inflationary pressures might not be temporary. That concern is echoed by many analysts, who see the economic impact of the conflict enduring for some time despite the U.S.-Iran peace deal.

"Even if crude oil prices decline in the future, it is highly possible that the upward deviation in prices will start to spread across a wider range of items, including to those other than petroleum-related goods, reflecting demand shocks stemming from overseas developments," one BOJ member said.

While the agreement between Washington and Tehran has reduced energy supply fears, the Middle East's future, including logistics recovery, remains uncertain, one member said.

Another view highlighted the impact of a weak yen as import price increases burden smaller businesses, justifying rate hikes. BOJ deputy governors have recently said that the yen has become an important factor in determining price trends, although it isn't a direct target of monetary policy.

Still, the summary showed a degree of caution about the economic downside of higher rates.

One opinion called for a hold at the last meeting, saying a rate hike could suppress demand by curbing corporate investment, potentially inducing declines in production and employment.

Policy board member Toichiro Asada, a former professor who is considered dovish, voted against the June hike.

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

(END) Dow Jones Newswires

June 23, 2026 22:47 ET (02:47 GMT)