Bank of Japan, increases attention to growing inflationary pressures

(Teleborsa) - After years of deflation, Japanese consumers have begun to feel the price increases that are affecting all advanced economies again. The topic is also becoming crucial for central bankers, with the minutes of the latest Bank of Japan (BOJ) meeting showing how members of the monetary policy committee have spent a lot of time trying to understand the movements of inflation and its effects on the economy. The consensus is that the year-over-year rate of change in consumer prices will increase for the time being , albeit with fluctuations, following an increase in energy prices, a moderate pass-on in the cost of raw materials and dissipation of the effects of the reduction. mobile phone charges.

Minutes show that one insider said inflationary pressure is on the rise, as the pandemic likely prompts many companies to recognize the limitations of their "low-margin, high-revenue" business models - which had been effective during the deflationary period. - and to change their pricing behavior. Noting that the stock prices of companies announcing price increases are tending to rise recently

 

, to another economist said that, in the current situation where markets pay attention to firms' ability to raise prices, there is a possibility that such price increases will spread further, leading to increased inflation expectations. in the medium and long term.

Meanwhile, another BOJ official commented that while changes have been observed in firms' pricing behavior and inflation expectations, achieving the price stability target by the end of fiscal 2023 is difficult. in light of developments in the output gap and inflation expectations.

Many members expressed recognition that, with the pass-on in commodity cost increases expected to continue, it has become increasingly important to look at the underlying trend in consumer prices and, from this perspective, are closely monitoring the trend in consumer prices. wages , which determines much of the prices of services and affects the tolerance of households to increase prices.


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