MNI BRIEF: BOJ Member Sees Big Upside Price Risk

One Bank of Japan board member voiced concern over large upside risk to prices saying that past empirical findings about inflation may not be applicable given structural changes such as the reversal of globalisation, according to Tuesday's release of Summary of Opinions from the October 27-28 meeting.

A different member said:“Although driven by cost-push factors, more firms have in fact passed upstream price increases on downstream. In this situation, firms' behavioral standard based on the assumption that prices will not increase may have started to change.” (See MNI POLICY: BOJ Studies Inflation Risks; Wages In Focus)

“The inflation rate is highly likely to remain relatively elevated as signs of increases have been observed even in services prices, as well as in administered prices for items other than energy,” another member said.

Meanwhile, some members maintain the baseline view that the year-on-year rise in consumer price index will slow in fiscal 2023.

One member said: “Taking into account the effects of a possible slowdown in the global economy, for example, the year-on-year rate of increase in the CPI is highly likely to decelerate to below 2% from fiscal 2023.”