By Megumi Fujikawa
TOKYO–The Bank of Japan’s policy board has signaled that the next interest-rate increase may be coming soon, according to its latest summary of opinions, with members keeping a particular eye on domestic wage trends.
“It is likely that conditions for taking a further step toward the normalization of the policy interest rate have almost been met,” one of the nine policy board members said at the meeting held on Oct. 29-30. The BOJ’s summary of opinions doesn’t identify individual speakers.
The Japanese central bank held its policy rate steady at 0.5%, a level unchanged since its last hike in January. Hajime Takata and Naoki Tamura called for a hike to 0.75% for the second straight meeting, but their proposal was defeated by a majority vote.
The summary also showed an opinion that financial conditions will remain accommodative even after the next rate hike.
“If there is no negative news regarding the global economy or financial markets, and if it is confirmed that firms’ active wage-setting behavior will be maintained — judging from, for example, moves by both labor and management in the initial stages toward the annual spring labor-management wage negotiations — this is likely to lead to a policy change,” the member said.
After the October meeting, BOJ Gov. Kazuo Ueda said that he wants to see early signs for next year’s annual wage negotiations before making the next move.
Views are split among economists and investors on whether the BOJ will resume monetary tightening at its next meeting in December. The full impact of U.S. tariffs remains to be seen, while it is still unclear whether new Prime Minister Sanae Takaichi will tolerate a rate hike.
The summary showed that a BOJ board member said there hasn’t been enough information regarding the direction or details of the Takaichi administration’s policies, thus their possible impact is yet to be incorporated into the central bank’s economic outlook. “Fiscal factors are important elements to consider when developing the outlook,” the member added.
The summary showed no strong objection to a future rate hike from the government participants.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
(END) Dow Jones Newswires
11-09-25 2010ET