BOJ July minutes – Calls for further gradual, but timely, interest rate increases

Bank of Japan July meeting minutes, full text here.

Headlines via Reuters:

  • Members shared a view over the need for vigilance to the risk of inflation overshoot.
  • Many members said it was appropriate to raise rates to 0.25%, adjusting the degree of monetary support.
  • A few members said it was appropriate to adjust the degree of monetary support moderately.
  • One member said economic conditions were good enough to somewhat push up the current very low policy rate.
  • One member said they must be vigilant to the impact of rising inflation, driven in part by the weak yen, on household sentiment and small firms’ costs.
  • A few members said it was appropriate to gradually adjust very low rates now to avoid being forced to hike rates rapidly later.
  • One member said the BOJ must adjust the degree of monetary support further if the strength of capital expenditure and wage growth could be confirmed.
  • One member said they must carefully look at various risks in proceeding with monetary normalisation.
  • One member said BOJ must avoid creating too much market expectation
    of future rate hikes as inflation expectations have yet to be
    anchored at 2%
  • One member said it
    was difficult to move rates mechanically as there was high
    uncertainty on Japan’s neutral rate level
  • Cabinet minister representative said must be vigilant to impact of
    weak yen, rising inflation on households’ purchasing power, downside
    risks to overseas economies

BOJ hiking, Fed cutting … policy divergence swings currency pairs around.

This article was written by Eamonn Sheridan at www.forexlive.com. Source