MNI: BOJ Opinions: Price Risk; May Exit From Waiting Mode
Some Bank of Japan board members acknowledged upside risks to prices but saw no need to rush a rate hike at the July 30-31 meeting, the summary of opinions showed Friday.
Others noted that while downward pressures on prices from falling import costs were fading, temporary price-boosting factors were having a stronger impact, reflecting labour shortages, shifting corporate and consumer attitudes toward pricing and wages, and higher inflation expectations.
A separate member pointed to the impact of rising prices for food, rice and gasoline in shaping consumers’ inflation perceptions.
Despite these concerns, members cited high uncertainty and warned that rapid rate hikes could significantly damage the economy. One argued for timely but cautious policy moves.
Another said second-round effects from earlier price gains were more likely to emerge and that the Bank should now place greater weight on upside price risks. This member added that communications should reflect the view that the inflation target will be met.
One board member suggested shifting the Bank’s communication focus from underlying inflation to actual price developments, the outlook, the output gap and inflation expectations.
The Board held the policy rate at 0.5% at the meeting. (See MNI BOJ WATCH: Ueda Says To Gradually Raise Rates)
