MNI BRIEF: Board Members Note Stronger Prices - BOJ Opinions

Some Bank of Japan board members expect stronger prices, while one member saw greater chance that the y/y rise in the core consumer price index will not fall below 2% at the June 15-16 meeting, the summary of opinions released Monday showed.

One member said, while overseas factors largely drove price rises, the contribution of domestic factors – such as consumer prices of services, or the y/y change in the GDP deflator, had increased. A different member said, despite the softening of raw material prices, firms' pass-through of cost increases had intensified, while the employment and income situation had improved and inbound tourism demand recovered.

Another member said the y/y rate of CPI increase will decelerate toward the middle of fiscal 2023 but will not fall below 2%, while a further member commented inflation could follow a slow path toward 2% without falling below it. "In addition, the risk that the rate will remain high at a level exceeding 2% cannot be ruled out," he added. "That said, there remains a significant risk of the inflation rate not returning to 2% after it falls below 2% in the future.”

A separate member noted the chance of persistent price rises should not be underestimated, noting European and US examples.