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

Bank of Japan July meeting minutes, full text here.

• 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.