Many Bank of Japan policymakers expressed caution in phasing out the bank's ultraloose monetary policy. One member emphasized that the economy's health did not warrant rapid interest rate hikes.
Despite the decision to end negative interest rates, the board was divided on the economy's strength. Some members believed the economy could withstand the exit, while others called for further scrutiny of wage gains and inflation expectations.
The BOJ's preference for a gradual approach to future interest rate hikes was evident in the opinions expressed. This cautious stance is likely to keep the Japanese yen under pressure due to the significant interest rate gap between Japan and the United States.
While some policymakers supported ending the ultraloose policy based on recent data, others emphasized the need to assess the broader impact of wage increases and rising labor costs on the economy.
The decision to exit the ultraloose policy was made by a 7-2 vote, with two members dissenting. One member opposed ending yield curve control and negative rates simultaneously, arguing for continued support for the economy through low borrowing rates.
Despite the rate hike, the BOJ remains committed to preventing abrupt spikes in borrowing costs. It pledged to maintain its bond-buying operations and increase purchases if yields rise rapidly. The bank currently purchases approximately 6 trillion yen worth of government bonds per month.