BoJ Minutes: BoJ will raise rates if economic and price projections are realized

The Bank of Japan (BoJ) board members shared their views on the monetary policy outlook this Thursday, per the Minutes of the March 18-19 meeting.

Key Quotes:

• Members agreed the BoJ would continue to raise rates if its economic and price outlooks were to be realised.
• One member said it’s appropriate to pay close attention to the new U.S. policies and their impact on the global economy.
• One member said the BoJ would need to be particularly cautious when considering the timing of the next rate hike, as downside risks stemming from U.S. policies had rapidly heightened.
• One member said, even with heightened uncertainties, it did not warrant the BoJ to be always cautious, and the BoJ may face a situation where it should act decisively.
• One member said that it is necessary to make nimble adjustments to the degree of monetary accommodation if it is needed to avoid overheating of financial activities.
• One member said that during the phase of the next policy interest rate hike, underlying CPI inflation might be fairly close to 2%.
• One member said that it is not necessary at this point to make any major changes to the bond tapering plan when the BoJ reviews its current plan in June.
• That member also said the BoJ would, however, need to examine from a longer-term perspective the reduction plan for April 2026 onward.
• One member said that given that the US Federal Reserve was in no hurry to adjust policy stance, the BoJ policy could be more flexible.

Market Reaction:

The hawkish minutes come on top of trade-related uncertainties and offer some support to the safe-haven Japanese Yen (JPY), which, in turn, keeps the USD/JPY pair below the 144.00 mark.