Some Bank of Japan policymakers have grown more confident about wage growth and the prospect of attaining the central bank's 2 percent inflation target, with one member calling for scaling back monetary stimulus from its maximum level, a summary of opinions showed Thursday.
The opinions were expressed at an Oct.30-31 policy-setting meeting where board members retained the existing monetary easing framework but decided to allow long-term interest rates to rise further above the previously rigid ceiling of 1.0 percent.
Citing recent inflation figures and comments by corporate executives about pay hikes, one member said, "The likelihood of achieving the price stability target of 2 percent in a sustainable and stable manner seems to have risen further since the July (meeting)."
"Therefore, it will be necessary for the bank to gradually adjust the degree of monetary easing down from its maximum level," the member said.
Other members also underscored the importance of wage growth in achieving the BOJ's price goal after surging import costs for energy and raw materials accelerated headline inflation. The focus is on the annual "shunto" wage negotiations between labor unions and management next spring.
One member pointed to a change in stance among firms, which have left wages unchanged since the bursting of the bubble economy in the early 1990s.
"The second half of fiscal 2023 will be an important period for determining whether the (inflation) target will be achieved," another member said, expecting the next fiscal year to see faster wage growth.
Under the yield control program, short-term interest rates are set at minus 0.1 percent and 10-year Japanese government bond yields are guided to "around zero percent."
With a future exit from current monetary policy in mind, the BOJ should let market forces decide on prices and improve liquidity in bond markets, one member said, adding that it should provide communication so the market can prepare for "a world where interest rates exist."
The summary of opinions was compiled by Governor Kazuo Ueda and comments were not attributed to individual members.
