BOJ board split on economy’s strength post stimulus exit, March summary reveals

During a recent Bank of Japan meeting in March, policymakers were at odds over whether the economy was ready to move away from ultra-loose monetary policy. While some members believed that recent data, such as significant wage hikes from large companies, justified ending the policy since the bank was getting closer to its 2% inflation target, others felt that more examination was needed to determine if wage gains would spread to smaller firms and if rising labor costs were affecting services prices. One member emphasized the importance of a cautious stance even after ending negative rate policy, as the economy may not require rapid interest rate hikes.

In early March, the BOJ made a historic shift away from focusing on reflating growth with massive monetary stimulus. This marked the end of eight years of negative interest rates and other unconventional policies. The decision to exit ultra-loose policy was made by a 7-2 vote, with Asahi Noguchi and Toyoaki Nakamura dissenting. The summary of opinions suggests that policymakers are closely monitoring the economic situation to determine the right timing for future interest rate hikes.

By Riley Johnson

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