Bank of Japan (Boj) published the summary of statements from its monetary policy meeting in March, with the most important findings mentioned below.
Key quotes
One member said inflation is somewhat exceeding expectations.
One member said wage increases in spring wage negotiations are something that exceeds last year’s figures with the nominal wages that rise at a pace in line with the achievement of Boj’s price targets.
One member said rising wages are likely to support consumption.
One member said there are questions about whether wage gains would be sustainable.
One member said global economic uncertainty is increasing.
One member said increased uncertainty about the global economy could be a new risk factor since our previous meeting in January.
One member said American inflation risk and financial deterioration of the risk has increased.
A member who said that underlying inflation is very likely to steadily accelerate against 2%, given steady price increases and the result of wage negotiations.
One member said the new US administration policies could affect Japan’s price movements through fluctuations in markets and, for example, rates.
Market reaction
After BoJ’s summary of statements, USD/JPY pair has risen 0.14% on the day to shop at 155.30 after writing.
Bank of Japan Frequently asked questions
Bank of Japan (Boj) is the Japanese central bank that puts monetary policy in the country. Its mandate is to issue banknotes and perform currency and monetary control to ensure price stability, which means an inflation target of approx. 2%.
The Bank of Japan embarked on an ultra-loose monetary policy in 2013 to stimulate the economy and fuel inflation in the midst of a low inflationary environment. The bank’s policy is based on quantitative and qualitative easing (QQE) or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened the policy by first introducing negative interest rates and then directly controlling the benefits of its 10-year government bonds. In March 2024, Boj raised the interest rate, and withdrawn effectively from the ultra-loose monetary policy attitude.
The bank’s massive stimulus caused the yen to write off against its most important currency peppers. This process worsened in 2022 and 2023 due to an increasing political deviation between the Bank of Japan and other main central banks, which chose to increase interest rates sharply to fight decades-high inflation levels. Boj’s policy led to an extension of other currencies and drawn the value of the yen. This trend turned partially in 2024 when Boj decided to abandon his ultra -country policy attitude.
A weaker yen and the increase in global energy prices led to an increase in Japanese inflation that exceeded Boj’s 2%target. The prospect of rising wages in the country – a key element that burns inflation – also contributed to the move.