By Leika Kihara
TOKYO (Reuters) – Some Bank of Japan board members called for the need to keep raising interest rates with one saying they should eventually be increased to at least around 1%, a summary of opinions voiced at the bank’s July policy meeting showed on Thursday.
At the July 30-31 meeting, the BOJ raised its short-term policy target to 0.25% from a range of 0% to 0.1% and released a detailed plan on how to taper its huge asset buying in another landmark shift away from a decade-long stimulus programme.
Some in the nine-member board said inflation-adjusted real interest rates will remain very low even after the rate hike, which meant the BOJ would continue to support the economy with loose monetary policy, the summary showed.
“The BOJ must proceed with further adjustment of the degree of monetary accommodation as appropriate” even after hiking rates in July if companies continue to raise prices, wages and ramp up capital expenditure, one member was quoted as saying.
Another opinion also called on the BOJ to keep raising interest rates in a “timely and gradual manner”, as Japan’s neutral rate – or the level of borrowing costs that neither cools nor overheats the economy – seems to be at least around 1%, the summary showed.
The BOJ does not issue an official estimate of the neutral rate, though analysts see it at anywhere between 1% and 1.5%.
(Reporting by Leika Kihara; Editing by Christian Schmollinger and Christopher Cushing)
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