Bank of Japan board members were more confident about wage growth and the price outlook when they met in September, with some expecting early next year will prove critical in achieving the central bank's inflation target, a summary of their opinions showed Monday.
One member touched on the potential impact of ending the central bank's negative interest rate at its Sept. 21-22 meeting, at which the Policy Board shot down speculation of an earlier-than-expected shift from monetary easing.
"Achievement of 2 percent inflation in a sustainable and stable manner seems to have clearly come in sight, and the bank may be able to determine whether it will be achieved around January to March of next year," a member said.
While there is some distance to go before reaching the inflation target, another said "the second half of fiscal 2023 will be an important period for determining whether the price stability target will be achieved" backed by wage hikes.
The BOJ projects core consumer prices, excluding volatile fresh food items, will rise 2.5 percent in the current fiscal year ending March but will undershoot 2 percent in the following two years.
In July, the BOJ loosened its grip on 10-year Japanese government bond yields, allowing them to rise toward 1.0 percent, in a tweak aimed at addressing volatility in financial markets and upside risks to inflation.
Among the nine board members, one said companies had become more proactive on wage and price hikes, while another said a virtuous cycle of inflation and pay growth had begun to emerge.
Despite some members pointing to positive developments regarding the inflation target, the BOJ has cited uncertainty over the outlook and remained committed to its dovish stance.
One member said the BOJ should discuss removing the yield cap program and ending negative rates "as a set," in relation to achieving the inflation target.
"Even if the bank were to terminate its negative interest rate policy, this could be considered as a continuation of monetary easing if real interest rates remain negative," another said, adding, "It is important for the bank to carefully provide communication on this."
The summary of opinions was compiled by Governor Kazuo Ueda and comments were not attributed to individual members.
