The Bank of Japan (BOJ) voted 8–1 on October 30 to maintain its benchmark policy rate at 1.25%, capping a week where every dissenting policymaker across major central banks pushed for monetary tightening.
BOJ Member Demands Faster Rate Hikes Amid Rising Inflation
During the meeting, board member Hajime Takata dissented and urged an immediate rate hike to 1.5%, citing underlying inflation reaching the central bank's 2% target. According to the official BOJ statement, Takata argued that the bank should lift borrowing costs toward neutral at a faster pace:
"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."
In contrast, board members Toichiro Asada and Ayano Sato, who previously opposed the September hike due to insufficient data, backed the decision to hold rates on Friday. The BOJ raised its core inflation forecast for fiscal 2027 to 2.6% from 2.4%, noting that Japan's core inflation rose above 2% in September for the first time in nine months. Additionally, the board voted unanimously to more than double the pace of its ETF sales starting in January 2027.
According to a Reuters poll conducted earlier this month, 54 of 78 economists expect a rate hike to 1.5% in the fourth quarter, with the majority pointing to the December 17–18 meeting.
Hawkish Dissent Sweeps Federal Reserve and Bank of Canada
The BOJ decision followed actions in Washington and Ottawa two days prior on October 28. The Federal Reserve held its target rate range at 3.75% to 4% in a 10–2 vote, coming one month after its September rate increase. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, seeking a quarter-point rate hike as macro watchers analyze central bank signals alongside broader market dynamics, such as how Fed officials monitor rate policy. CME FedWatch now prices in a 74.9% probability of a Fed rate hike in December.
On the same day, the Bank of Canada (BoC) raised its policy rate to 2.5%, marking its first rate hike since July 2023. The BoC cited consumer price index (CPI) inflation lingering near 3% since April and projected it to reach 3.5% by year-end. In its press release, the BoC noted:
"There could be a need to increase the policy rate further, but given uncertainties, Governing Council agreed to proceed carefully."
Key Takeaways
- Bank of Japan holds key rate at 1.25% on October 30 with a single 8–1 dissent proposing 1.5%.
- BOJ raised its fiscal 2027 core inflation forecast from 2.4% to 2.6% and will double ETF sales starting January 2027.
- Federal Reserve maintained rates at 3.75%–4% on October 28 despite two votes for a 25 bps hike; CME FedWatch assigns 74.9% odds of a December hike.
- Bank of Canada executed its first rate increase since July 2023, lifting its rate to 2.5%.
- Both the Fed and BoC announce next policy decisions on December 9, while the BOJ meets December 17–18.
Why It Matters
Persistent global inflation pressures are preventing central banks from executing aggressive rate-cut cycles, creating a complex backdrop for risk assets including cryptocurrencies and traditional equities. The hawkish dissents across the BOJ and Fed indicate that central bankers remain anxious about sticky inflation driven by energy costs and persistent price pressures. Investors should closely track the cluster of policy meetings on December 9 and December 17–18, as tighter monetary policy across G7 economies could constrain global market liquidity moving into year-end.
