BOJ minutes show debate over size of future rate hikes

Minutes released Thursday show a Bank of Japan policymaker called for debate over rate-hike sizes as the bank entered a new phase of monetary policy.

At its September 17-18 meeting, the BOJ raised its policy rate from 1.0% to 1.25%, its first increase in three months.

The policymaker said Japan should respond flexibly as central banks in the United States and Europe shifted toward rate hikes, rather than stick to a set pace.

That could mean the BOJ changes the size of future increases to reflect economic and financial conditions, instead of following its usual 0.25 percentage-point steps.

Many policymakers saw a risk that inflation could exceed the BOJ’s 2% target, while some said more time was needed to assess consumer spending.

The BOJ held its rate at 1.25% in October, saying underlying inflation had generally reached its target.

Markets are increasingly expecting another increase at the BOJ’s next meeting, scheduled for December 17-18.