In the Summary of Opinions of BoJ’s October 27-28 meeting, it’s noted that because of low inflation, it’s important to persistently continue with extremely accommodative monetary policy even when pent-up demand increases.” Also, BoJ should “persistently continue with the current monetary easing” so that “a rise in corporate profits leads to wage increases and the virtuous cycle from income to spending intensifies.”
To “alleviate the effects of deterioration in the terms of trade”, it’s necessary to improve economic activity and raise inflation expectations so that “firms can smoothly pass on the rise in raw material prices to domestic selling prices.” It’s important to “improve the output gap” so that “the pass-through of price rises will be promoted..
Yen’s depreciation reflected “differences in inflation rates and monetary policy stances among economies.” It’s important to consider the impact of rise in international commodity prices and Yen’s depreciation. But, it is necessary to keep in mind that their effects on each economic entity are uneven depending on industry and size.
BoC Macklem: High inflation is transitory but not short-lived
BoC Governor Tiff Macklem said in in TV interview over the weekend that current high inflation will be “transitory but not short-lived”.
I think transitory, to economists, means sort of not permanent,” he said. “I think to a lot of people, transitory means it’s going to be over quickly. … I don’t know exactly what the right word is, but it’s probably something like, ‘transitory but not short-lived.'”
Macklem pointed to the latest economic projections, which indicated that inflation would rise further from current 18-year high of 4.4% to 5%, then gradually drop back to 2% by the end of next year. And that’s what he meant by “transitory but not short-lived”.