BOJ's Policy Board Becoming More Concerned About Effects of Weaker Yen — Update

By Megumi Fujikawa

TOKYO--The Bank of Japan's board is becoming more concerned about the inflation outlook as a sharply weaker yen threatens to drive up import prices, a summary of its latest meeting showed.

"While the yen's depreciation is likely to push down the economy in the short run through price rises driven by cost-push factors, it could push up underlying inflation in the medium to long run" through increases in inbound spending and domestic production, one of the BOJ's nine policy board members said at the meeting held on April 25 and 26.

The central bank maintained its target for the overnight call rate in the 0% to 0.1% range in April following its decision to end negative interest rates in March.

The BOJ's summary of opinions, released Thursday, quoted one member as saying the central bank could speed up the pace of rate increases if underlying inflation grows faster than its projections due to a weak yen.

The summary doesn't identify individual speakers.

In late April, the yen weakened to a three-decade low of around 160 to the dollar, which likely triggered yen-buying intervention by the Japanese government.

Ministry of Finance data released Thursday showed that foreign reserves declined 0.9% from a month earlier to $1.279 trillion at the end of April. Analysts say the decline in foreign-currency reserves suggests that the government conducted currency intervention, although Japanese officials haven't confirmed this.

The yen is trading around 155.50 per dollar on Thursday morning in Tokyo.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

May 08, 2024 21:17 ET (01:17 GMT)

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