The Bank of Japan’s June minutes reveal a majority prioritizing inflation risks over growth, signaling potential further tightening ahead.
The Bank of Japan raised its policy rate by 0.25 percentage points to 1.0% in June, reflecting a 7-1 board vote focused on persistent inflation risks. The decision underscores concerns over rising inflation expectations and underlying price pressures, despite temporary dampening from energy subsidies.
Minutes show the board halted the taper of Japanese government bond purchases, maintaining monthly buying at around 2 trillion yen. This move prioritizes market stability over balance sheet normalization, with dissent from one member advocating for continued reductions.
Policymakers highlighted rapid pass-through of high crude oil costs into producer and consumer prices, suggesting inflation may be more entrenched than headline CPI indicates. The stance reinforces expectations for further tightening if growth remains resilient.