The Bank of Japan’s board is growing more concerned about inflation as the yen weakens, potentially driving up import prices. At a recent meeting, one member mentioned that while the yen’s depreciation may cause short-term price rises, it could lead to higher inflation in the long run through increased inbound spending and domestic production.
In April, the central bank kept its target for the overnight call rate unchanged at 0% to 0.1% after ending negative interest rates in March. A summary of opinions from the meeting suggested that the bank might consider raising rates faster if underlying inflation increases due to a weak yen.
In late April, the yen dropped to a thirty-year low against the dollar, prompting speculation of yen-buying intervention by the Japanese government. Ministry of Finance data revealed a decline in foreign reserves, indicating possible currency intervention by the government.
Currently, the yen is trading at around 155.50 per dollar in Tokyo. The situation remains fluid, with analysts closely monitoring developments in the foreign exchange market.
For more information, contact Megumi Fujikawa at megumi.fujikawa@wsj.com.