Energy inflation must be tackled with non-monetary policies - BOJ workshop

TOKYO, May 23 (Reuters) - A Bank of Japan board member and prominent economists tasked with analysing price trends at a BOJ-sponsored workshop agreed that energy-price inflation should be countered with non-monetary steps rather than tighter policy, a summary showed on Monday.

The panel, including BOJ Executive Director Shinichi Uchida and two academics, met in March to discuss factors behind differences in the pace of consumer inflation in Japan and Western economies as well as the future price outlook.

"Panelists shared the view that it is desirable to continue monetary easing in response to weak demand, while it is desirable to respond to price hikes in some items, particularly energy, by measures other than monetary policy," the summary of the March 29 workshop, the first in a series, said.

There has been speculation among market players that the BOJ could follow in the footsteps of other major central banks by tightening monetary policy, including through raising interest rates, to try to slow the acceleration in prices.

Japan's core consumer prices grew 2.1% in the year to April, the fastest rate in seven years.

The BOJ, however, believes inflation will not be sustained around its 2% inflation goal in the longer-term as current price hikes are being caused by higher energy and raw matrials costs.

BOJ Deputy Governor Masayoshi Amamiya told the workshop that weak household demand and firms' cautious price-setting behaviour were likely among factors behind Japan's stubbornly low inflation.

The BOJ said a second workshop will be held on May 30.
Reporting by Kantaro Komiya; Editing by Tetsushi Kajimoto and Kirsten Donovan

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.