The minutes of the Bank of Japan July meeting.
- Many members said the US–Japan trade deal reduced uncertainty in the outlook, but tariffs still need close scrutiny for their impact on the economy and prices.
- One member said the baseline scenario of temporary stagnation in growth and underlying inflation was unchanged.
- Another member stressed the BOJ must scrutinise the impact of its January rate hike.
- Members agreed the BOJ is expected to keep raising rates if the economy and prices move in line with forecasts.
- One member said more data is needed before policy decisions, as US monetary policy and FX could shift quickly depending on US inflation and jobs.
- One member argued the BOJ should move the policy rate closer to neutral as inflation strengthens and the output gap closes.
- Another member said BoJ should raise rates when possible as Japan’s policy rate is below level deemed neutral, shouldn’t be too cautious and miss opportunity to hike
- One member said BoJ can exit current wait-and-see mode on rate hike as soon as this year if U.S. economy resilient, impact on Japan’s economy proves Limited
- One member noted the BOJ should reduce monetary support in a timely manner if inflation stays above 2% for a prolonged period.
- One member warned it could become difficult to guide short-term rates if the BOJ scales back current account balances to pre-global financial crisis levels.
- A few members said the BOJ must consider not just the size but also the composition of its asset holdings.
- One member said the BOJ should aim to hold assets with as neutral a market impact as possible.
- One member observed that companies are more confident passing on costs through price hikes due to shifting consumer views on inflation.
- One member said the pass-through of higher wages into service prices is progressing slowly and does not appear to be accelerating.
- One member said inflation expectations are not yet anchored at 2% but are steadily approaching that level.
- A few members said the direct impact of US tariff policy on Japan’s economy may not be significant.
- One member said likelihood of achieving BOJ’s baseline scenario has heightened due to receding uncertainty on tariff policy
- A few members said underlying inflation gradually accelerating towards 2%, but have yet to reach that level
- One member said Sharp overshoot in BOJ’s 2025 price forecast was due largely to unexpected rise in food prices, not sign underlying inflation was accelerating
- One member said underlying inflation was probably between 1.5% and 2.5% now
- A few members said Chance of U.S. economy sliding into recession was small
- A few members said must scrutinise whether fiscal policy could push up inflation
Full text here:
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The "summary;"of this was published five or so weeks ago:
