BoJ Summary of Opinions from the April meeting noted a member said that given real interest rates are at a significantly low levels, it is appropriate for the BoJ to continue raising policy rates
- Member said Japan’s real policy interest rate is by far at the lowest level globally, BoJ must to continue to adjust the negative real interest rate in preparation for the second-round effects of price rise.
- Member said the BoJ may need to address the risk of prices deviating upwards.
- Member said in conducting monetary policy, BoJ must keep risk of inflation significantly deviating upward from materialising.
- Member said in case where upside risks to prices increase, BoJ must accelerate pace of rate hikes without hesitation.
- Member said while there is no need to take hasty action at this point, BoJ should raise rates soon, barring evident signs of economic slowdown.
- Member said at this juncture, a policy interest rate hike that prioritises the containment of inflation is highly likely to have adverse effects on economic developments.
- Member said it is difficult to foresee the impact of the situation in the Middle East, and the bank needs to adopt a wait-and-see approach at this meeting.
- Member said while Middle East situation remains uncertain, all scenarios point to further upside risks to prices.
- Member said if tension over situation in Middle East becomes prolonged, there will be a need to raise policy interest rate to neutral at an earlier timing.
- Member said it is quite possible BoJ will raise rates from next meeting onward even if the future course of Middle East situation remains unclear.
Context
The recent BoJ Summary of Opinions highlights a notable shift towards a more hawkish stance among its members, emphasizing the need for ongoing policy rate adjustments due to persistently low real interest rates. This commentary suggests that the BoJ is preparing to tackle inflation risks proactively, which could lead to a rate hike sooner rather than later, particularly if inflation pressures continue to build amid global uncertainties, including geopolitical tensions in the Middle East.
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