MNI BRIEF: BOJ Minutes: A Few Members Note Rate Hike Return

A few Bank of Japan board members said they would consider resuming interest rate hikes if trade tensions were expected to ease without further escalation, according to minutes of the June 16-17 meeting released on Tuesday.

However, the minutes offered no indication on the timing or pace of future rate increases.

“With inflation being at levels higher than expected, the Bank might face a situation where it should adjust the degree of monetary accommodation decisively, even when there were high uncertainties,” one member said.

Another noted that, given ongoing uncertainties, the Bank was currently in a phase of pausing its interest rate hikes. “However, the Bank also needed to be able to respond in a flexible and nimble manner so that it could return again to the phase of raising its policy interest rate depending on policy developments in the United States,” the minutes showed.

A few members also voiced concern about the effect of rising food prices on households' inflation expectations. “These members then expressed the view that, as prices of rice — a staple food in Japan — and other frequently purchased food items could have a greater impact on households' perceived inflation and inflation expectations, it was necessary to closely monitor developments in prices of these items,” the minutes said.

At its most recent July 30-31 meeting, the BOJ raised its median forecast for core CPI for this fiscal year to 2.7% from 2.2% in April, but kept its policy rate at 0.5%. (See MNI BOJ WATCH: Ueda Says To Gradually Raise Rates)