Minutes Show Policymaker Wants BOJ to Consider Further Rate Hikes Further

Reuters file photo
Pedestrians walk past the Bank of Japan building in Tokyo on March 18.

TOKYO (Jiji Press) — A Bank of Japan policymaker called on the central bank to consider raising interest rates further at a meeting in March, when it raised rates for the first time in 17 years, according to the minutes of the meeting released Thursday.

The BOJ board member expressed the view that “it was appropriate to proceed deliberately but steadily with monetary policy normalization in response to developments in economic activity and prices,” according to the minutes of the March 18-19 meeting.

At the meeting, the BOJ board voted to end the central bank’s negative interest rate policy after many members shared the assessment that the likelihood of achieving its 2% inflation target has risen further, the minutes showed.

The minutes showed that many board members “shared the recognition that it was appropriate for the bank to consider changing the monetary policy framework, as its large-scale monetary easing measures … had likely fulfilled their roles.”

One board member said it was “appropriate that the bank reach the starting line of monetary policy normalization at this meeting,” according to the minutes.

At the meeting, the BOJ board voted to continue buying Japanese government bonds at a monthly pace of about ¥6 trillion.

The minutes showed that some members pointed out that the actual amount of JGB purchases “should be determined flexibly … with some upper and lower allowances, while taking account of market developments.”

Some members expressed the view that it was “desirable for the bank to reduce the amount of JGB purchases at some point in the future, and also reduce the amount outstanding of its JGB holdings,” according to the minutes.

The minutes showed one board member said “there might have been a shift in the norm of wages not increasing easily,” referring to prospects for continued pay increases at shunto labor-management wage talks this spring.

One board member, however, warned that “it still could not be said that the virtuous cycle from prices to wages had become more solid on a national basis.”

The minutes showed that one board member also warned that “there would be a risk that the achievement of the price stability target would be delayed due to the momentum of the virtuous cycle operating in Japan’s economy being lost.”