Goldman Sachs: BoJ Summary of Opinions - FJElite

The BOJ’s September Summary of Opinions points to a somewhat more hawkish tone on inflation and the path of policy. Officials generally judged that underlying inflation is approaching 2%, with near-term upside risks elevated, while higher crude oil prices received greater attention than at the July meeting amid Middle East developments and currency moves. There was also stronger support for bringing rates closer to the BOJ’s longer-term target relatively soon, with one comment suggesting monetary policy has entered a new phase. Overall, the discussion appears broadly consistent with Governor Ueda’s September press conference, although some board members sounded more hawkish by cautioning against being overly concerned about rates moving above the neutral level.

Despite this hawkish tilt, the discussion does not appear to point toward an imminent acceleration in the hiking cycle. While some officials noted that the pace could be increased if inflation begins to overshoot expectations, others saw little evidence of the kind of accelerating inflation that would risk the BOJ falling behind the curve. There was therefore no clear indication that consecutive rate hikes were actively being considered. The lack of discussion around the potential impact of reduced monetary accommodation on bank lending and asset prices also contrasts with concerns raised by the Governor previously.

The base case remains for the next rate hike in January 2027, with October and December currently viewed as less likely. For October, the key issue is the absence of sufficiently strong evidence of renewed upside inflation risks, while December could be complicated by the government’s FY2027 budget and potentially heavier JGB issuance. However, the timing could be brought forward if inflation risks increase materially, particularly through a rapid depreciation of the yen.