Thursday, January 23, 2020 - 19:44

MNI POLICY: BOJ Minutes: A Few Members Say Must Mull Options

TOKYO (MNI) - The Bank of Japan must consider possible pre-emptive policy options to cope with greater downside risks to economic activity and prices, a few Board members suggested at the December 18-19 policy-setting meeting, according to the minutes released Friday.

However, many board members were prepared to stick with the current easy policy, while closely watching developments.

One member voiced concern over side-effects from the Bank's easy policy, citing the deceleration in lending by regional financial institutions.

The BOJ voted 7-2 to left monetary policy unchanged at the meeting, as widely expected, repeating that "downside risks concerning overseas economies seem to remain significant, and it also is necessary to pay close attention to their impact on firms' and households' sentiment in Japan."

The Bank also maintained forward guidance for policy rates, saying it expects "short- and long-term interest rates to remain at their present or lower levels as long as it is necessary to pay close attention to the possibility that the momentum toward achieving the price stability target will be lost."

Other key points from the minutes:

-- One member, referring to the fact that the BOJ had conducted additional monetary easing 6 months after the previous sales tax hike in 2014, "pointed to the possibility that it might become necessary to conduct additional monetary easing this time as well, depending on the underlying trend in consumption.

-- Another member said, "given the significant degree of downside risks, the BOJ should examine whether additional monetary easing would be necessary and how it should address the risk of an economic downturn, and that, in doing so, cooperation with the government in terms of fiscal and growth policies would become important."

-- Another member said, "it was a matter of concern that the pace of growth in lending by regional financial institutions had decelerated together with a decline in profits."

-- A few members noted "the side-effects of monetary easing also should be examined from the viewpoint of the overall economy and the stability of the financial system as well as in individual effects, such as one a particular sector or specific aspect of the sector."

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:

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