BOJ October minutes show internal split on timing of rate hike amid market volatility concerns.

The British Forex Dealerminutes of the Bank of Japan's October policy meeting, released on November 11, reveal significant internal disagreements about the timing of interest rate hikes. This reflects the cautious evaluation of the monetary policy path by the Bank of Japan amid global economic uncertainty. Some policymakers expressed concerns about potential market volatility, suggesting that close attention should be paid to economic conditions, especially the yen's movement, to determine if Japan's economy can withstand the increased borrowing costs from rate hikes. Some members said that although the risk of a hard landing in the U.S. seems to have eased, it is still too early to conclude that the market has stabilized, and therefore, the Bank of Japan needs to be patient in its observations.

The minutes show that some members believed a cautious stance should be taken on the timing of rate hikes to avoid hasty decisions. One member pointed out that the Bank of Japan must "take time to act cautiously" to address future market uncertainties. However, other members emphasized the necessity of clearly communicating to the market the Bank of Japan's determination to implement further rate hikes once economic and price conditions are met. According to the records in the minutes, one member mentioned that "after pausing to assess the developments in the U.S. economy, the central bank should consider further rate hikes," highlighting that the current Japanese economy no longer requires large-scale monetary support.

At the meeting held on October 30-31, the Bank of Japan maintained ultra-low interest rates but noted that the conditions for a rate hike could become clearer with the decline of risks in the U.S. economy. Some analysts believe that this move might suggest that the Bank of Japan will accelerate the normalization of its policies. However, for those members concerned about market volatility and economic resilience, continued careful observation remains the priority strategy.

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