BoJ June meeting Summary of Opinions: Appropriate to maintain current monetary easing

“(It is) premature to shift policy as smaller firms becoming keen to hike wages, invest more,” per the Summary of Opinions for Bank of Japan’s (BoJ) monetary policy meeting held in June reported Reuters.

Key statements

Wage growth needed, not just cost-push inflation, to sustainably, stably hit price target.

BoJ must maintain easy policy with eye on side-effects, as long-term risk to prices skewed to downside.

BoJ must keep easy policy but must be mindful of chance it is under-estimating sustainability of Japan's price rises.

No need to make operational tweaks to YCC as distortion in shape of yield curve has been resolved.

BoJ must consider reviewing YCC at an early stage, even as it maintains easy monetary policy.

Bond market function improved but still remains at low level.

There is uncertainty on whether inflation, after slowing toward middle of current fiscal year, will bounce back.

Rise in Japan inflation increasingly driven by domestic factors.

Inflationary pressure likely to remain strong for time being.

There is a chance consumer inflation may overshoot initial expectations.

There is strong chance consumer inflation will moderate, but won't slow back below 2%, toward middle of current fiscal year

USD/JPY remains pressured

Despite the dovish Summary of Opinions, the USD/JPY pair remains pressured around 143.50 as it pares the latest gains at the highest levels since November 2022. It’s worth noting that comments about the Yield Curve Control (YCC) policy seemed to have trigger the Japanese Yen’s (JPY) corrective bounce.

Also read: Japan Top FX Diplomat Kanda: Recent Yen moves are rapid