The Bank of Japan discussed the possibility of inflation rising to 2% as inflation widens.

Tokyo — Some Bank of Japan policymakers saw consumer inflation temporarily accelerate towards the target of 2% as price pressures increased as corporate pricing behavior changed, Wednesday. A summary of the views at the January meeting was presented.

However, many board members emphasized the need to maintain ultra-loose monetary policy to support vulnerable economies facing new risks from the proliferation of the Omicron coronavirus, the summary said. rice field.

“The year-on-year growth rate of consumer inflation could temporarily approach 2%. If that happens, it’s important to see the facts behind the rise and whether they are sustainable.” Said one of the Bank of Japan’s nine board members.

“Consumer inflation could temporarily reach a level of about 1.5% in the first half of 2022. Whether that momentum will be maintained at sufficient momentum to consistently approach the BOJ’s 2% target. It depends on wages and inflation expectations, or overall strong demand, “said the second opinion.

The Bank of Japan raised inflation expectations at its January meeting, but said inflation was still far from its target and there was no need to rush a super-loose policy.

Japan is unaffected by global commodity inflation and wholesale prices are rising at a record pace.

However, decades of low inflation have made many Japanese companies cautious about raising prices for fear of scaring consumers, and instead have absorbed costs by streamlining operations.

Some BOJ policymakers saw signs of change and pointed out that more and more companies are passing high costs on to consumers, a summary of the January meeting said.

“Many companies need to abandon the traditional view that prices continue to fall and change the way they price,” the third comment said.

However, others were skeptical that inflation would continue to accelerate towards the BOJ’s goals. “It will be difficult to reach the BOJ’s price targets by the end of 2023,” said one board member.

Japan’s core consumer prices rose 0.5% year-on-year in December, well below the BOJ’s target, but remained high for nearly two years as a sign of increased inflationary pressures due to rising fuel and raw material costs. ..

Some analysts expect consumer inflation to approach 2% when mobile phone fee cuts end in April, and seek ways to raise wages to compensate for rising household living costs. We are putting pressure on policy makers.

Reika Kihara