The Bank of Japan (BOJ) today released the minutes of its January meeting. They say BOJ directors agreed that consumer prices are “inflationary.” It could rise to higher levels than the BOJ had expected if private companies pass on higher costs to consumers.
The minutes of the meeting state that several BOJ directors have pledged to closely monitor wage developments. This is because wage figures are a key component of the cost of services and determine how much the household sector will be affected by rising prices.
At a meeting on January 17-18, the BOJ’s Executive Board decided to maintain a particularly accommodative monetary policy. This includes keeping the key interest rate at -0.1% and maintaining the target yield on 10-year government bonds at 0% with the aim of keeping borrowing costs low to help private companies and households.
In its economic outlook released after that day’s meeting, the BOJ raised its 2022 inflation forecast to 1.1% from 0.9% as energy and commodity prices rose and the yen weakened.
BOJ Governor Haruhiko Kuroda said earlier in a press release, ” I don’t think the BOJ needs to change its current monetary policy or discuss interest rate hikes. Because I believe that the rise in inflation is only a temporary situation. It is difficult to predict whether The core consumer price index (CPI), will rise near the BOJ’s 2% target. Inflation caused by consumer spending will remain around 1%, so the BOJ does not need to adjust its monetary policy at this time. In the past Japan faces increasing inflationary pressures. This is partly due to the economic recovery in the country.”