BOJ Members Saw Need for Faster Rate Hikes in July: Summary

Tokyo, Aug. 10 (Jiji Press)–Bank of Japan policymakers in July expressed their views that interest rate hikes should be accelerated, given upside risks to inflation, a summary of opinions at the latest monetary policy meeting showed Monday. “It cannot be said that ‘the risk of waiting is marginal,’ and it is therefore necessary for the bank to accelerate the pace of adjustment to the degree of monetary accommodation,” a BOJ member was quoted as saying at the July 30-31 meeting. Another opinion said that the BOJ had entered a “new phase” in which it must adopt a “nimble approach” and discuss the size of rate hikes without “adhering to a certain pace of rate hikes.” One board member said that it would be appropriate to determine the timing and pace of future rate increases while carefully assessing factors such as developments in the Middle East, expanding artificial intelligence-related demand, and foreign exchange market movements. The member also emphasized that due attention should be paid to upside risks to the underlying inflation. One opinion showed concern that a materialization of upside risks to prices would not only become a “significant blow to Japan’s economy and to people’s daily lives” but could also force the BOJ to make “rapid and substantial policy interest rate hikes,” causing a “double shock” to the economy. Market participants widely expected the BOJ to carry out a rate hike every six months. However, a policymaker pointed to the possibility that the pace of future rate increases could be faster than market expectations, according to the summary. END [Copyright The Jiji Press, Ltd.]