BOJ's December Rate Hike Reflected Concerns over Weak Yen
Bank of Japan's decision at a monetary policy meeting in December to raise its policy rate to 0.75 per cent reflected concerns over higher inflation stemming from a weak yen, according to minutes of meeting released on Wednesday (January 28).
A member of the central bank's Policy Board said at the December 18-19 meeting that Japan's inflation-adjusted real policy interest rate was "by far at the lowest level globally," according to the minutes.
The official said that it was appropriate for the BOJ to adjust the degree of monetary accommodation, "considering the impact such a low real policy interest rate had on prices through foreign exchange markets."
At the meeting, the board voted unanimously to raise the policy rate by 0.25 percentage point to 0.75 per cent, a 30-year high.
The minutes showed that most board members said that it was "desirable...to make decisions as appropriate at each monetary policy meeting without having a specific pace in mind."
One member said that the BOJ "should adjust the degree of monetary accommodation with intervals of a few months in mind for the time being."
Some members said that in deciding whether to raise the policy rate, the BOJ "should consider the impact of the yen's depreciation on inflation rates."
One board member said, "Raising the policy interest rate promptly could curb future inflationary pressure and lead to holding down long-term interest rates."
[Copyright The Jiji Press, Ltd.]
