The global economy is repeatedly pulled between easing and tightening, but the latest policy minutes from the Bank of Japan (BOJ) provide an answer — the country's actual policy interest rate remains the lowest in the world.

A statement from a central bank official directly woke up the market: Japan's room for interest rate policy is far from exhausted. As soon as the words were spoken, the market responded quickly, implying that a new round of rate hikes is already on the way.

Just look at the BOJ's pace of operations. In December last year, they raised the policy rate to 0.75%, the highest level in nearly 30 years. Since fully abandoning negative interest rates in March 2024, under the leadership of Ueda Shinji, the central bank has launched a delayed normalization process. However, this is only the beginning; the current interest rate level is still far from the so-called "neutral rate" — the balance point that neither stimulates nor restrains the economy.

According to the general forecast of market analysts, the terminal interest rate in this rate hike cycle may be in the range of 1.25% to 1.5%. In other words, there is still room for further hikes. The label of "world's lowest" is both a calm assessment of the current policy stance and a preparation for continued tightening ahead.

The background is quite clear: inflation has exceeded the 2% target for 44 consecutive months, the yen's depreciation pressure has not disappeared, and internal and external contradictions are still present. The BOJ's actions are driven both by necessity and proactive measures.