BOJ Summary – one monetary policy board member suggested the neutral rate is at least 1%

Bank of Japan Summary of Opinions at the Monetary Policy Meeting on July 30 and 31

• Several members view economic activity and prices developing in line with BOJ outlook
• Some see room to raise “significantly low” policy rate, citing negative real rates at 25-year lows
• Opinions divided on timing – some want more data, others ready to move now
• Agreement on need for gradual approach to avoid rapid rate hikes
• Members eye neutral rate of “at least around 1%” as medium-term goal
• Plans to reduce JGB purchases seen as promoting market function, not tightening
• Careful monitoring of JGB market needed as BOJ cuts purchases
• Government reps stress need for clear communication on policy changes
• Ongoing debate on sustainability of inflation/wage growth cycle

The opinions suggest the BOJ is laying groundwork for further policy normalization, but remains split on exact timing and pace.

Of course, this was all then, this is now:

• ForexLive Asia-Pacific FX news wrap: BOJ’s Uchida triggered a sharp yen decline
• The Bank of Japan is in no mood to tangle with equity markets and it’s safe to re-enter the carry trade.

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Full text:

• Summary of Opinions at the Monetary Policy Meeting on July 30 and 31, 2024[PDF 320KB]

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I posted this info earlier, but ICYMI:

The Bank of Japan (BOJ) releases a “Summary of Opinions” after each monetary policy meeting. It serves as a record of the discussion and views of the Policy Board members on various economic and financial issues.

Key points about the Summary:

• The summary includes the views of the Policy Board members on economic conditions, both domestically and globally. This includes assessments of economic growth, inflation, and employment trends, among other indicators.
• The summary also outlines the Policy Board members’ views on the effectiveness of the BOJ’s current monetary policy measures, including interest rate policy, asset purchases, and yield curve control. Members may discuss the pros and cons of these policies and their potential impact on the economy.
• The summary includes discussions on the outlook for monetary policy and the potential risks to the economy. Board members may express their views on the appropriate timing and direction of future policy changes, as well as the potential impact of external factors such as global economic conditions.
• The summary also includes any dissenting views among the Policy Board members. If a member disagrees with the majority view on a particular issue, they may express their own opinion and rationale.

In a few week’s time we’ll get the Minutes of this meeting. The Minutes are a more detailed record of the discussions and decisions made during the meeting.

• The Minutes include a more complete record of the views expressed, including any dissents or alternative opinions that may not be included in the summary.
• The Summary of Opinions is typically released a few days after the policy meeting, while the Minutes are published about a month later. This means that the Summary of Opinions can provide more up-to-date information on the BOJ’s current stance and view on the economy and monetary policy.
• The Summary of Opinions is usually written in a more accessible language, making it easier to understand the BOJ’s views on monetary policy.
• The Minutes, on the other hand, are often more technical and may require a deeper understanding of economics and financial markets.
• The Summary of Opinions is typically shorter than the Minutes.

For clarity, this is not inside the Bank of Japan. I think.

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