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BOJ April Minutes show some concern about the weak yen on inflation & wages

With hindsight the April meeting was a bit of a placeholder between the rate hike (the first in 17 years) at the March meeting:

and

the meeting last week where the Bank flagged a reduction in JGB purchases to come:

We’ve already had the ‘summary’ of the April meeting:

Headlines via Reuters:

  • Member agreed consumption likely to increase moderately
  • A few members said
    companies might become more active in raising prices, wages than
    initially expected
  • Members discussed
    risks associated with impact of weak yen on inflation
  • One member said
    impact of weak yen on inflation, wages may not prove temporary
  • One member said weak
    yen could lead to overshoot in underlying inflation
  • One member said the BOJ must scrutinise without any preset idea the chance firms may renew
    efforts to pass on rising import costs via price hikes
  • Members shared view the BOJ must scrutinise how recent yen falls could affect underlying
    inflation
  • One member said key to future monetary policy outlook would be capex,
    consumption
  • One member said
    there were various upward risks to inflation
  • A few members said
    fx is among key factors affecting economy, prices, boj must respond
    with monetary policy if outlook and risks change
  • One member said the BOJ must respond with monetary policy if fx
    volatility affects firms’ medium-, long-term inflation expectations
  • One member said the BOJ must deepen debate on timing, degree of future interest rate hikes
  • One member said the BOJ could raise rates moderately before it’s
    sufficiently convinced about chance of durably hitting price goal, to
    avoid being forced to hike rates rapidly later
  • One member said boj must raise rates at appropriate, timely manner to
    avoid causing stress on economy
  • One member said
    there is sufficient chance pace of policy normalisation could
    accelerate if underlying inflation continues to overshoot due in part
    to weak yen

more to come

Full text is here

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

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