BOJ Policymakers See Easing Economic Risks Ahead of Rate Hike

The Bank of Japan's (BOJ) policy meeting in June saw most policymakers believe that economic risks were receding, according to minutes released by the central bank. The BOJ raised interest rates at this meeting.

This view was partly due to progress made in securing alternative sources of raw materials dependent on the Middle East. Several members pointed out that underlying inflation may exceed the BOJ's 2% price stability target.

One member noted that the neutral interest rate, which neither stimulates nor cools the economy, appears to be around 2%. This led to a suggestion that the BOJ should consider raising interest rates every few months. However, another member cautioned against a rate hike, citing the potential for it to suppress aggregate demand and induce simultaneous declines in inflation, production, and employment.