The Bank of Japan (BOJ) kept its policy rate at 1.25% on October 30 in an 8–1 vote. Board member Hajime Takata dissented and proposed a hike to 1.5%.
Every dissenter at the BOJ and the US Federal Reserve (Fed) this week wanted higher rates. The Bank of Canada (BoC) went further and raised its rate.
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Why One BOJ Member Wants to Move Faster
According to the BOJ statement, Takata argued that underlying inflation has reached the 2% target. In his view, that marks a new phase for policy. The bank should therefore lift rates toward neutral at a faster pace so it can respond nimbly.
“He proposed that the Bank set the guideline for money market operations as follows: the Bank would encourage the uncollateralized overnight call rate to remain at around 1.5 percent. The proposal was defeated by a majority vote,” the statement read.
Two members who opposed the September hike did not dissent this time. Toichiro Asada and Ayano Sato had argued that the data did not justify higher rates. On Friday, both backed the hold.
Meanwhile, the BOJ outlook said underlying inflation is now broadly in line with its 2% target. It raised its fiscal 2027 core inflation forecast to 2.6% from 2.4% and sees upside risks to prices.
That view tracks recent data. Japans core inflation rose above 2% in September for the first time in nine months. The board also voted unanimously to more than double the pace of its ETF sales from January 2027.
Markets now look to December for the next move. In a Reuters poll earlier this month, 54 of 78 economists expected a hike to 1.5% this quarter. Most of them named the December meeting.
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The Fed Waits While Canada Raises Rates
The BOJ decision came 2 days after rate calls in Washington and Ottawa. Inflation concerns shaped both of those decisions as well.
On October 28, the Fed held its target range at 3.75% to 4% in a 10–2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack wanted a quarter-point hike. The pause came one month after a September increase.
The Fed said inflation is still elevated and that more data will guide its next move. Traders now expect a December hike, with CME FedWatch pricing in a 74.9% chance after the decision.
On the same day, the BoC lifted its policy rate to 2.5%, its first increase since July 2023. It said high oil prices have kept CPI inflation near 3% since April. The bank expects inflation to reach about 3.5% by year-end.
“There could be a need to increase the policy rate further, but given uncertainties, Governing Council agreed to proceed carefully,” the press release added.
As a result, December now carries a cluster of decisions. The Fed and the BoC both announce on December 9, while the BOJ meets December 17 and 18. Oil prices may decide how many of those meetings end in a hike.