Government representatives from both the Ministry of Finance and Cabinet Office supported the policy rate change as necessary for achieving the price stability target while emphasizing the importance of clear communication and continued cooperation between the BoJ and government.

Economic Outlook:

• Japan's economy continues to recover moderately, though with some weakness in certain areas
• The economic outlook remains generally in line with March 2024 projections
• Wage hikes in spring 2025 are expected to be at least comparable to 2024 levels, supported by corporate profits and labor market conditions
• There's evidence of a shift away from the "zero norm" of stagnant wages, with more firms incorporating wage increases into their medium-term plans

Prices and Inflation:

• Underlying CPI inflation is expected to increase gradually toward the 2% target
• The output gap remains positive due to labor shortages, contributing to continued high inflation
• Both upside and downside risks to prices are significant and balanced
• There are concerns about potential stagflation if U.S. inflation resurges while global trade frictions intensify

Monetary Policy Decision:

• The BoJ judges it appropriate to raise the policy interest rate to 0.5% at this meeting
• The timing is considered "neutral" relative to market expectations
• Real interest rates are expected to remain significantly negative even after the rate hike
• Some members advocate for continued gradual rate increases if economic conditions remain on track

Key Concerns:

• The yen's depreciation impact on households and firms through cost increases
• The divergence between monetary policies of the BoJ and Federal Reserve
• The profitability gap between large firms and struggling small/medium-sized enterprises
• The need to carefully monitor "market-based prices" excluding housing rent and public services