BOJ Policymakers Worry About Inflation Accelerating Further

The Bank of Japan (BOJ) policymakers debated mounting price risks even as they raised borrowing costs to a 31-year high in June, according to meeting minutes. A few board members said consumer inflation will likely get a significant boost in the latter half of the current fiscal year due to planned price hikes for various goods.

The BOJ raised interest rates to 1% at its June meeting as rising fuel costs from the Middle East conflict added to inflationary pressures from a weak yen and tight job market. Two board members called for faster interest rate hikes to push the BOJ's policy rate closer to neutral levels.

Most members said the pass-through from high oil prices had progressed at a relatively fast pace for business-to-business transactions, which could spread to consumer prices across various items. They emphasized the need to be concerned about inflation accelerating further due to this situation and firms becoming more active in raising prices.