FX.co ★ BoJ Weighs Inflation Risks, Members Mull Future Hikes: July Minutes

According to minutes from the Bank of Japan's July meeting, while the board unanimously decided to maintain the current policy rates, some members expressed support for potential future rate increases. "The BoJ's policy rate is presently lower than what is considered neutral, given the persistently high prices and the recent equilibrium in the output gap," remarked one board member. The members collectively noted that Japan's economy had shown moderate recovery, albeit with certain weaknesses, emphasizing the importance of monitoring the impact of U.S. tariff policies, with one member suggesting that at least 2–3 more months are required for a thorough assessment. Despite being tempered by rising prices, private consumption appeared robust, buoyed by increases in employment and income. Regarding inflation, there was a consensus that pressures on food prices, especially rice, are expected to ease. One board member pointed out that the surge in rice prices was not only due to weather conditions but also a consequence of previously withheld production cost increases, and noted that inflation in processed foods is likely to decelerate as global commodity prices decline.