BOJ Policymakers See Lower Economic Risks, Support Interest Rate Hikes

The Bank of Japan (BOJ) policymakers expressed a general consensus that economic risks had receded at their June meeting, which led to an interest rate hike decision. The BOJ released the minutes from this meeting on Wednesday.

According to these minutes, many Policy Board members cited progress in securing alternative sources for raw materials heavily dependent on the Middle East as a reason for reduced economic risks.

Some policymakers emphasized that inflation could exceed the 2% price stability target, prompting a need for interest rate hikes. One member suggested considering raising interest rates every few months, given that the neutral interest rate was estimated to be around 2%.

However, another member cautioned against hiking interest rates immediately, warning that it could suppress aggregate demand and lead to declines in inflation, production, and employment.