Japan policymakers flag inflation persistence and asset-price risks in October BoJ minutes

The October minutes of the Bank of Japan reveal concerns about persistent inflation and asset price risks. While Japan's economy shows moderate recovery, the impact of U.S. tariff policies on corporate profits appears limited, not significantly affecting investment or employment trends. Financial conditions remain highly accommodative, with credit expansion observed, particularly in real estate and M&A. Some policymakers are considering an increase in the policy rate to 0.75%, fueled by concerns over prolonged accommodative policy. The minutes indicate that core inflation is running around 3% year-on-year, largely driven by food prices and wages. This persistent inflation raises concerns that may support future rate hikes. The policymakers emphasize the importance of ongoing wage-setting behavior as a key determinant for future decisions, with particular attention on developments leading into the 2026 spring wage negotiations. Clear communication and a flexible approach to policy are also highlighted as essential to avoid market instability while gradually normalizing monetary policy.