BoJ Minutes: Several members said must be vigilant to risk inflation may accelerate more than expected

“Several members said must be vigilant to risk inflation may accelerate more than expected,” as per the March month’s Monetary Policy Meeting Minutes from the Bank of Japan (BoJ).

Key statements

Members agreed there was very high uncertainty surrounding Japan's economy.

Several members said cost-push price pressure might last longer than expected if global commodity prices rise more than projected.

A few members said there were some positive signs towards achieving BoJ price target.

A few members said must scrutinize balance of effect, cost of stimulus, but must maintain massive stimulus for now.

One member said BoJ must focus on risk of missing achievement of price target with premature policy shift, rather than risk of being too late in changing policy.

One member said shift in monetary policy would affect markets, wide range of entities so must be debated cautiously.

One member said BoJ must take steps to improve market function, including that for corporate bonds and swap markets, as needed.

One member flagged idea that as long as wage and price growth are positive and stable, they could be allowed to rise to high levels.

A few members said that idea wasn't valid as history suggests that when inflation is too high, its moves tend to become volatile.

A few members said it was appropriate to debate tweaking BoJ’s policy guidance tied to covid-19 pandemic.

USD/JPY stays firmer past 135.00

Following the BoJ Minutes, USD/JPY remains on the front foot while extending Friday’s recovery to 135.25 by the press time.

About the Bank of Japan Monetary Policy Meeting Minutes

The Bank of Japan publishes a study of economic movements in Japan after the actual meeting. These meetings are held to review economic developments inside and outside of Japan and indicate a sign of new fiscal policy. Any changes in this report tend to affect the JPY volatility. Generally speaking, if the BoJ minutes show a hawkish outlook, that is seen as positive (or bullish) for the JPY, while a dovish outlook is seen as negative (or bearish).