- BoJ officials see recent Yen weakness as upside inflation risk
- BoJ is said to be open to raising rates faster than every six months
- BoJ is said to be close to the stage of anchoring, not spurring inflation
- BoJ widely seen holding interest rates in July after June hike
- Full report here
Bank of Japan officials are open to raising interest rates sooner than the roughly six-month pace expected by most economists if inflationary pressures intensify, according to people familiar with the matter. While the BoJ is widely expected to keep rates unchanged at its July 31 meeting following June’s hike to 1%, policymakers see no fixed timetable for future tightening.
Officials are increasingly concerned that the yen’s continued weakness could fuel inflation by raising import costs, even though they do not target exchange rates through monetary policy. They also see growing evidence that companies are passing higher costs on to consumers more quickly, suggesting inflation is becoming more entrenched.
As underlying inflation approaches the BoJ’s 2% target, policymakers believe their focus is shifting from generating inflation to ensuring it remains sustainably anchored around the target. Financial markets are already pricing in a faster pace of tightening than economists anticipate, with overnight index swaps implying around a 72% chance of another rate hike by October.
This article was written by Giuseppe Dellamotta at investinglive.com.
