Members of the Bank of Japan's committee discussed the cautious necessity of raising the benchmark interest rate, with the minutes of the October policy meeting not clearly indicating any imminent action next month.

Minutes released by the Bank of Japan on Monday showed that at the meeting, one of the nine committee members said, "It is currently impossible to determine whether the market is stable or not." The Bank of Japan kept rates unchanged at this meeting, held shortly before the US presidential election.

The council member also stated, "As the central bank has consistently expected to raise policy rates at a moderate pace, it has time to monitor the future trend of the US economy, including post-election trends."

Since the minutes did not clearly indicate the possibility of a rate hike in December or January next year, observers of the Bank of Japan are speculating on the timing of the central bank's next move. Over 80% of surveyed economists expect the Bank of Japan to resume hiking rates in January next year.

Nevertheless, comments in the minutes about the need for communication that will not surprise the market suggest that the Bank of Japan will make more effort to signal in the next rate hike than it did in July.

Currently, the signals about the timing of the Bank of Japan's next rate hike are mixed. Some opinions clearly indicate that a hike is not impossible, as the central bank is just waiting for the clouds over the direction of the US economy to clear.

A council member stated, "The central bank should consider further rate hikes after assessing the development of the US economy."

After deciding to maintain the borrowing cost at 0.25% in October, Bank President Tanada Hiko did not rule out the possibility of a rate hike next month. Since Trump won the election, Tanada has not publicly expressed his views on the US economy.

Over the past month, the yen has weakened against the US dollar, a move that could amplify inflation pressures. Many observers of the Bank of Japan believe that the fate of the yen will be the catalyst for the next rate hike.

Minutes show that a director of the Bank of Japan pointed out the possibility of significant exchange rate fluctuations when the Fed and the Bank of Japan move in opposite directions in terms of interest rates. The director also highlighted the risks of unexpected decisions, which would complicate the future policy path.

The director stated, 'If further rate hikes by the central bank cause market shocks, then there is a risk that the normalization of monetary policy may be hindered in the long term.' Some economists believe that the rate hike by the Bank of Japan in July was one of the triggers for the global market crash in early August.

The unstable politics in Japan is another key factor in the Bank of Japan's rate hike path, as Prime Minister Ishiba Shigeru faced the ruling party's worst election results since 2009 last month. A prominent opposition leader stated that the Bank of Japan should not raise rates before March next year.

One of Prime Minister Ishiba's closest allies, Minister of Economic Revitalization Akaza Akira, attended a Bank of Japan meeting for the first time. Akaza Akira stated that it is extremely important for the Bank of Japan to continue implementing monetary easing to ensure complete eradication of deflation.

According to the minutes, a Cabinet Office official stated, 'The government will prioritize escaping deflation in economic and fiscal management.' The government expects the central bank to achieve its price target while 'continuing to closely cooperate and exchange views with the government.'

Editor/Rocky