BOJ’s March Meeting: Policymakers Split on Ending Ultra-Loose Monetary Policy and Raising Interest Rates Quickly

March Summary Reveals BOJ Board Split on Economy’s Strength Following Stimulus Exit

The Bank of Japan’s March meeting saw policymakers divided on whether the economy could withstand an exit from ultra-loose monetary policy. This uncertainty suggests that the next interest rate hike may not happen soon, as some policymakers believed that recent data, such as significant wage hikes offered by large companies, supported the decision to end unconventional policies. However, others called for further examination of wage increases among smaller firms and the impact of rising labor costs on service prices.

Despite the vote to end ultra-loose policy at the March meeting, there were concerns about the need for cautiousness in raising interest rates quickly, as the economy may not be ready for rapid hikes. Two policymakers dissented: former academic Asahi Noguchi and ex-corporate executive Toyoaki Nakamura.

The summary of opinions from the Bank of Japan’s March meeting highlights the ongoing debate within the central bank about the appropriate timing and pace of monetary policy changes. This shift in approach marks a significant change in how the BOJ plans to boost economic growth.

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