MNI BRIEF: Board Notes Potential For Rate Hikes - BOJ Minutes
MNI (TOKYO) - A Bank of Japan board member emphasised the need to adjust the degree of easy policy further following the BOJ Board's call to raise the policy interest rate to 0.25% at the July meeting, the minutes of the meeting showed on Thursday.
The BOJ should raise the policy rate to neutral, estimated to be at least 1%, toward the second half of the projection period, said another member.
“Many members shared the recognition that real interest rates were expected to remain significantly negative even if the Bank raised the policy interest rate slightly, and accommodative financial conditions would continue to support economic activity,” the minutes showed. “Some members expressed the view that it was appropriate to start gradually adjusting the significantly low policy interest rate at this stage, in response to developments in economic activity and prices."
This would help prevent the risk of inflation exceeding 2% "and a situation where such higher inflation consequently made rapid policy interest-rate hikes necessary at a later time,” the minutes showed.
The members also agreed that risks to prices were skewed to the upside for fiscal 2024 and 2025. "Many members shared the recognition that given that the year-on-year rate of change in import prices had turned positive again, upside risks to prices required attention in conducting monetary policy,” the minutes showed.
The Board decided to hold its policy rate steady last week. (See MNI BOJ WATCH: Ueda Says BOJ Has Time To Watch Price Moves)