The Japanese central bank admitted that “it should increase interest rates not too late”, given the impact that the recent increase in costs could have on consumer prices, indicates a note released this Monday.

It is necessary for the Bank [do Japão] consider whether they are necessary more adjustments to monetary policy from the point of view of risk management”, according to the minutes of the institution’s monthly meeting, which ended on June 14th.

Japan’s central bank does not rule out further interest rate hikes to curb inflation


“Although price developments have corresponded to the Bank’s perspectives, there is a possibility that prices could deviate cima of the base scenario if there is another streaming from recent cost increases to consumer prices”, warned the Bank of Japan (BoJ).

Inflation in the country has remained in a range between 2% and 2.5% in recent months, close to the half of 2% set by the Japanese central bank.

The institution said that inflation is stabilizing, but considered it still difficult to determine whether the spring salary increases (the biggest in more than 30 years) “have been sufficiently reflected in statistics”, at a time when consumption remains weak.

Japan’s central bank reduces public debt purchase program

On the 14th, the BoJ announced a cut a purchase of securities public debtin another step towards progressive monetary normalization, but chose to maintain the short-term reference interest rate at 0.1%.

Despite an increase in March, which ended more than a decade of negative rates, Japan continues to have very low interest rates. below of the other major world economies, including the US Federal Reserve (5.5%) and the European Central Bank (4.25%).

A trend that has led Japan’s currency to depreciate. The Japanese currency was trading this Monday in a range above 159 yen per dollar, after falling to 160 yen at the end of April, for the first time in 34 years.

US dollar surpasses 160 yen barrier for the first time since 1990

According to the minutes of the meeting, the members of the BoJ committee are aware that the evolution of exchange rates has a broad impact on economic activity and, if it continues uncontrolled, “it will affect the good development of the economy”.

However, the document added that, as it does not only affect the foreign exchange market, monetary policy must be implemented based on a broader picture.

The central bank was also cautious regarding the successive suspensions of exports by important Japanese car manufacturers due to irregularities in inspections.

The BoJ concluded that it was “appropriate to continue with the current Flexibilization monetary policy for now”, even to assess the effects of these suspensions on Japan’s economy.


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