MNI: BOJ Opinions Show Need To Mull Rate Hikes Cautiously
MNI (TOKYO) - Several Bank of Japan board members emphasised the need to consider raising the policy interest rate cautiously amid unstable markets and uncertainty over the U.S. economy at the Sept 19-20 meeting, the summary of opinions showed on Tuesday.
“The Bank's basic thinking remains that if the outlook for economic activity and prices will be realised, the Bank will adjust the degree of monetary accommodation accordingly,” one memeber noted. “That said, financial markets have remained unstable. In making policy decisions, it is important for the Bank to carefully assess not only developments in financial markets at home and abroad but also the factors underlying these developments, such as the situation in overseas economies, particularly the U.S. economy.”
The BOJ held its policy rate unchanged at 0.25% last month. (See MNI BOJ WATCH: Ueda Says BOJ Has Time To Watch Price Moves)
Another member argued the bank should assess developments in overseas economies, particularly the U.S. “Since the upside risk to prices reflecting higher import prices has become smaller with the yen's depreciation being retraced recently, the Bank has enough time to assess the situation,” the member added.
A different member said, “Japan's economy is not in a situation where the Bank may fall behind the curve if it does not raise the policy interest rate at a certain pace. Therefore, the Bank will not raise its policy interest rate when financial and capital markets are unstable.”
Another member added, since uncertainties regarding overseas economies have heightened, "in order to examine the impact of recent market fluctuations, it is appropriate for the Bank to monitor developments in overseas economies and market developments for the time being and make further adjustments to the degree of monetary accommodation when such uncertainties decline.”
However, one member saw the need to raise the rate swiftly. “I remain convinced that if it is confirmed that there will be no major downward revisions to its outlook, it is desirable for the Bank to raise the policy interest rate without taking too much time,” the opinions showed.