BOJ Policymakers Stress Need to Further Analyze Prices

June 25, 2018

Tokyo- Some Bank of Japan officials at a policy-setting meeting earlier this month stressed the need for further analysis and discussion on the recent sluggish growth in consumer prices in the country, the BOJ said Monday.

"It will be necessary to deepen analysis and discussion on prices" at the BOJ Policy Board's next policymaking meeting on July 30-31, when the bank adopts its quarterly Outlook for Economic Activity and Prices report, one of the nine members of the board said at the June 14-15 policy meeting, noting that it will "still take time" for the BOJ to attain its year-on-year consumer inflation target of 2 pct.

Toward the compilation of the quarterly report, it is necessary to "thoroughly analyze once again the background" of the recent weakness in wages and prices, and its effects on inflation expectations, another board member said.

In judging the inflation momentum, it is important to examine the aggregate supply-demand balance and firms' behavior comprehensively, a different member said.

The BOJ "should conduct monetary policy by giving due consideration to its sustainability while making sure that severe distortions do not arise in the economic and financial conditions" amid its prolonged massive monetary easing policy, one member said.

Some referred to adverse effects of the superloose policy. One member said, "It is important to conduct market operations with a view to maintaining the functioning of financial markets as much as possible."

Another said that effects and possible side effects of the BOJ policy "should continue to be examined from every angle."

Trading in Japanese government bonds has been inactive recently, due in part to a decrease in outstanding JGBs in the market on the back of the BOJ's massive purchases under the ultraeasy regime. There have been days when no transactions were done for the benchmark newest issue of 10-year JGBs.

One member voiced concern over the protectionist policy of the administration of U.S. President Donald Trump, saying that the effects of the policy on the global economy "warrant close attention."

At the June 14-15 meeting, the BOJ board decided to leave unchanged its policy of guiding 10-year JGB yields to around zero pct and applying the bank's short-term policy interest rate of minus 0.1 pct to part of commercial financial institutions' current account deposits at the central bank, and buying JGBs to boost its holdings by about 80 trillion yen a year. Jiji Press