BOJ officials said in the meeting summary that inflation caused by supply shocks should be incorporated into monetary policy discussions. It has been reported that further rate hikes are expected this week even after the rate increase in June.
The BOJ meeting summary reports that BOJ officials said the sharp rise in inflation caused by higher import costs and currency fluctuations should be incorporated into monetary policy deliberations. The emphasis on supply-side factors indicates concern about the persistence of inflation.
In the context of the meeting, the summary suggests that the BOJ was indicating a direction of gradual rate increases while taking into account concerns raised at its May monetary policy meeting. People familiar with the matter have reported that the BOJ raised its interest rate to 1% in June and that another rate hike is expected this week.
Executive Director Nakamura Koji (中村康治) said supply shocks could have more systematic and nonlinear effects, and expressed the view that widening disparities in income and wealth, geopolitical risks, climate change and other factors could amplify their impact. He added that monetary policy should deepen its understanding of these effects by combining data with information gathered through interviews.
After ending its 10-year stimulus program in 2024, the BOJ has indicated that it will continue raising interest rates, citing the growing risk that inflation could exceed its 2% target because of factors including tight labor markets and rising fuel costs.