Many Bank of Japan board members agreed that wage increases are important to achieve a 2% price target and saw the need to keep easy policy at the June 16-17 policy-setting meeting, the minutes released on Tuesday showed.
“One member said that the continuation of monetary easing could be considered effective to encourage sustained wage hikes by firms,” the minutes showed.
“A few members expressed the recognition that, with the output gap remaining negative for more than two years, in order to achieve a sustained rise in wages, which would push up demand, it was appropriate for the BOJ to continue with the current monetary easing and thereby firmly support the economy.”
“A different member said that achieving the price stability target of 2% required wage increases that exceeded 2% inflation; however, with the output gap being negative, Japan's economy had not reached a situation where labor market conditions were likely to accelerate a rise in wages,” the minutes showed.
The same member “continued that, on this point, the economic environment in Japan had been different from that in the United States and Europe, where monetary accommodation had been reduced.”