BOJ Policymakers Debate Faster Rate Hikes Amid Rising Inflation Risks
The Bank of Japan (BOJ) policymakers debated accelerating interest rate hikes in July due to rising inflation risks, according to a summary of their meeting. This comes as import costs from a weak yen and strong demand for AI-related products add pressure to already high fuel prices.
Some members warned that the risk of underlying inflation overshooting the 2% target is higher than before, requiring a faster-than-expected pace of rate increases. One member noted that 'the risk of waiting is no longer marginal' and called for accelerating the adjustment to monetary accommodation.
BOJ Governor Kazuo Ueda's hawkish communication after the July meeting aligns with these opinions, suggesting a strong chance of a rate hike as soon as September. The focus has shifted from pushing up underlying inflation to preventing it from overshooting the target.