BOJ Member Warned of Inflation Risks at March Meeting

Tokyo, May 7 (Jiji Press)-A Bank of Japan policymaker called for “particular attention” to the upside risks of prices at the monetary policy meeting in March, a summary of opinions at the meeting showed Thursday. According to the summary from the meeting held on March 18-19, the member also noted that Japan’s policy interest rate was currently below the neutral range that neither stimulates nor cools the economy. Many members of the BOJ Policy Board voiced concern that higher crude oil prices stemming from heightened tensions in the Middle East could accelerate inflation. At the meeting, one member stressed that unless there were signs of significant deterioration in the economic environment or in small and medium-sized firms’ wage hike stance, it would be necessary to raise the policy interest rate “without hesitation.” Several members emphasized the importance of avoiding a situation in which belated rate hikes prompt prices to surge, saying that the BOJ would need to consider more timely adjustments to the degree of monetary accommodation. On the other hand, one member pointed out that adverse effects from heightened Middle East tensions, such as rising gasoline prices, have already begun to emerge, and that “future developments would continue to warrant attention.” Another member said that higher crude oil prices could bring about stagflation, or stagnant economic growth alongside inflation, but in the case of temporary inflation, the basic approach should be to wait “without taking hasty actions,” suggesting that any decision on rate hikes should be made carefully. END [Copyright The Jiji Press, Ltd.]