Bank of Japan meeting notes deflation history as resistance to interest rate hikes

According to the Bank of Japan's September meeting notes released on Wednesday, some committee members cited Japan's long-term experience of deflation as a need for caution when discussing the timing of a rate hike, setting up a stand-off with two members calling for a rate hike.
"A few members felt that it was necessary to take into account Japan's experience of prolonged deflation when weighing the costs and benefits of waiting," the meeting notes said.
According to the meeting notes, one member said: "The BoJ's monetary policy needs to be distinguished from other central banks by special consideration, which is to anchor inflation expectations at 2 per cent."
The minutes shed light on the intensity of discussions at the September policy meeting, where Kazuo Ueda, governor, faced two votes against keeping interest rates unchanged for the first time. While the written record generally highlighted the likelihood of a near-term rate rise, it also made clear that Japan's more than a decade of deflation was making some members cautious and waiting for more data to support it.
With the Bank of Japan due to make its next policy decision on December 19, market watchers will be watching closely to see how likely a rate hike will be communicated at that time as the BoJ seeks to avoid a shock to the financial marekt.