The Bank of Japan published the main opinions from its July policy meeting. The opinions on monetary policy conduct covered whether to leave the policy rate unchanged or raise it, assumptions regarding price trends, and the impact of external factors.
The Bank of Japan published the main opinions from its July policy meeting, presenting multiple views on monetary policy conduct. The discussion covered whether to leave the policy rate unchanged or continue considering further rate increases, as well as the policy approach to the degree of monetary easing and maintaining flexibility.
Some expressed the view that the policy rate should be left unchanged this time, taking into account the lag before the effects of rate hikes weigh on inflation and the domestic economy. Others said the policy rate should continue to be raised in response to economic, price and financial conditions, given the situation in which the underlying inflation rate is approaching 2%.
Some said that adjustments to the degree of monetary easing should take into account factors including developments in the Middle East, growing AI demand and foreign exchange movements. Many called for a flexible response while paying close attention to the risk of a rise in underlying inflation.
The importance of stabilizing the underlying inflation rate at around 2% was also emphasized. The discussion focused on concerns about a prolonged period of price trends above 2% and ensuring flexibility in policy decisions aimed at normalization.