TOKYO: Bank of Japan policymakers were divided on how quickly the central bank should raise interest rates further, minutes of the bank’s July meeting showed, highlighting uncertainty on the timing of the next increase in borrowing costs.

At the July meeting, the BOJ raised short-term interest rates to 0.25% and unveiled a detailed plan to slow its massive bond buying, taking another step towards phasing out a decade of huge stimulus.

At least two in the nine-member board saw scope to raise rates further, with one saying the BOJ should hike borrowing costs in a “timely and gradual” manner to avoid being forced to do so rapidly later, the minutes showed on Thursday.

Another member said the BOJ must raise rates further once it was confirmed that firms were increasing capital expenditure, wages and prices, according to the minutes. Several others, however, warned against proceeding too quickly in phasing out stimulus.

Shadow of Abenomics clouds BOJ’s rate hike path

“Normalisation of monetary policy must not be an end in itself,” one member was quoted as saying, adding that the BOJ must monitor various risks and move carefully.

“The BOJ should avoid a situation where market expectations for future rate hikes increase excessively,” as inflation expectations have yet to be anchored at its 2% target and prices remained vulnerable to downside risks, another member said.