By Leika Kihara
TOKYO, May 7 (Reuters) – Many Bank of Japan board members saw the need to raise interest rates if the Iran war-driven energy shock is prolonged and gives rise to concerns over second-round effects on broader inflation, minutes of their March meeting showed on Thursday.
One member said the BOJ should raise rates “without long intervals,” while another said the central bank would need to hike “without hesitation” if the economy showed no signs of deterioration from the Middle East conflict, the minutes showed.
“Many members said if supply shocks from the Middle East tension were temporary, the basic response would be to look through their impact,” the minutes showed.
“But the members continued that if these shocks became prolonged and gave rise to concerns over second-round effects on general prices, the BOJ must respond after examining the impact on inflation expectations and underlying inflation,” it said.
The BOJ kept its short-term policy rate steady at 0.75% at the March 18-19 meeting, which was first to be held since the U.S.-Israeli attacks against Iran on February 28.
At a subsequent meeting in April, the central bank again kept rates steady but a hawkish split highlighted the board’s growing concern over mounting price pressures.
(Reporting by Leika Kihara; Editing by Jacqueline Wong and Sam Holmes)
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