TOKYO: Bank of Japan (BOJ) board members agreed that the central bank must scrutinise how the yen’s recent sharp moves could affect inflation, minutes of the BOJ’s July policy meeting showed on Wednesday (Sep 28).
One member said the downward pressure on the yen may ease as the global economic slowdown begins to weigh on inflation and long-term interest rates across the world, the minutes showed.
“If the global economy experiences a shock, there’s a chance the current weak-yen trend could change into a strong-yen trend,” another board member was quoted as saying.
At the Jul 20 to Jul 21 meeting, the BOJ projected inflation would exceed its 2 per cent target this year in fresh forecasts, but maintained ultra-low interest rates and signalled its resolve to keep monetary super loose.
Analysts blame the extremely low rates for accelerating the Japanese currency’s declines.
In a surprise move last week, the government intervened in the currency market to stem yen weakness by selling dollars and buying yen for the first time since 1998.