MNI BRIEF: Price Upside Risk, Faster Normalisation - BOJ Opinions
Bank of Japan board members noted the upside risk to prices and the potential for faster monetary policy normalisation driven by the weaker yen at the April 25-26 meeting, the summary of opinions showed on Thursday.
One member said underlying inflation could continue to deviate upward from the baseline scenario against the backdrop of a weaker yen increasing the pace of policy normalisation.
“In order to adjust the degree of monetary accommodation in a way that does not exert stress on the economy, it will be necessary for the Bank to raise the policy interest rate in a timely and appropriate manner as the likelihood of realizing the outlook for economic activity and prices rises,” another member said.
A separate member pointed to the yen's depreciation and high oil prices, noting this has weakened the premise that cost-push factors will wane.
“The recent depreciation of the yen and rises in prices, such as crude oil, have started to affect producer prices through an increase in import prices,” noted a different member, adding the Bank must focus on the possibility the current deceleration in the rate of increase in goods prices will bottom out and start to reverse.
MNI reported last month the BOJ would act should the weak yen induce greater inflation. (See MNI BOJ WATCH: Ueda Flags Policy Change On Weak Yen-Led Inflation)