TOKYO: Many Bank of Japan policymakers saw the need for an interest rate hike based on their views on the economy and prices last month, a summary of the latest monetary policy meeting showed Thursday.
At the July 30-31 meeting, Policy Board members recognized economic and price developments that were largely in line with the BOJ’s projections, according to the summary of opinions expressed at the gathering.
One opinion said the central bank “needs to raise the policy interest rate in a timely and gradual manner.”
At the meeting, the nine-member board voted seven to two to raise the bank’s short-term interest rate target, or the policy rate, to around 0.25 percent from the previous range of around zero to 0.1 percent.
One opinion said that “the current economic situation seems to be favorable enough that the bank can raise the significantly low policy interest rate to some degree,” while another stated that “upside risks to prices require attention.”
Regarding whether to raise interest rates further after the July meeting, there was an opinion that “if it is confirmed that prices will develop in line with the bank’s outlook and that positive corporate behavior, such as solid business fixed investment, sustained wage hikes and a continued pass-through of cost increases to selling prices, will be maintained, it will be necessary to proceed with further adjustment of the degree of monetary accommodation as appropriate.”
At the meeting, board members Toyoaki Nakamura and Asahi Noguchi voted against the interest rate hike. According to the summary, one opinion argued that “there are many data sets showing somewhat weak developments in, for example, the economic growth rate and private consumption.”
A Cabinet Office official who attended the meeting as an observer asked the BOJ to “carefully explain its policy intention to the public in the case of a policy interest rate hike, so that it does not have unexpected effects on financial and capital markets and the real economy.”
Another decision made at the July meeting was a cut in the monthly amount of its Japanese government bond purchases. On this, one opinion called for reducing the amount “steadily at a moderate pace,” while another said the reduction “is aimed at promoting a more active role for markets, not at monetary tightening.”
JIJI Press