By Leika Kihara
TOKYO, Dec 28 (Reuters) – Bank of Japan policymakers see a need to keep interest rates ultra-low, but weigh rising prospects that higher wages may finally eradicate the risk of a return to deflation , according to a summary of the views expressed at their December meeting.
Its increased attention to rising inflationary pressures could keep alive market expectations that the Bank of Japan will phase out Governor Haruhiko Kuroda’s massive stimulus when he leaves office in April next year.
“The rise in prices is accelerating not only in the case of goods, but also in services (…). There is a possibility that the inflationary momentum in Japan will be accentuated,” one of them is quoted as saying. members in the summary published on Wednesday.
At the meeting on December 19-20, the Bank of Japan maintained its ultra-easy monetary policy, but surprised markets with a surprise change to its bond yield controls that allows long-term interest rates to rise further. .
Several of the nine board members said the decision was aimed at making the current stimulus program more sustainable by addressing its side effects, rather than a step toward ending ultra-loose monetary policy, the summary showed.
However, the Board’s discussions delved into signs of a change in Japan’s price outlook that could set the stage for a withdrawal of stimulus when Kuroda steps down next year.
Although core consumer inflation reached 3.7% in November, the highest level in four decades, Kuroda has ruled out the possibility of a short-term rate hike, considering that the increase in prices is due to the costs of raw materials and not to strong demand.
Analysts expect the Bank of Japan to raise its inflation forecasts in its new quarterly growth and price forecast, to be released after the next policy meeting on January 17-18.
(Reporting by Leika Kihara; editing in Spanish by Flora Gómez)
