In the minutes of the Bank of Japan's June monetary policy meeting released on the 5th, the majority of policy board members shared the view that downside risks to the economy had 'declined significantly compared to some time ago.' They also agreed that there was a risk the underlying inflation rate could overshoot the 2 percent target, and opinions in favor of raising rates to 1 percent were voiced one after another. Meanwhile, one member argued that the neutral interest rate was around 2 percent and that it would be desirable to consider rate hikes every few months, but another member expressed caution, saying that a rate hike could suppress aggregate demand and risk causing a simultaneous decline in inflation, output, and employment. At the meeting, the decision was also made to halt the reduction in government bond purchases from April next year, and the majority expressed concern that continuing the reduction could have an unforeseen impact on market stability, but one member stressed that there was no disruption in the government bond market and absolutely no reason to halt the reduction.
BOJ decided to hike rates and halt bond purchase reduction, pushing yields up.
