Wednesday, November 7, 2018 - 22:15

MNI POLICY:BOJ Members Concerned with Weak Price, Econ Outlook

TOKYO (MNI) - Some Bank of Japan board members voiced concerns over the recent weak development in inflation and outlook of the economy, stopping short of calling for additional easing policy, according to the summary of opinions expressed at the bank's policy meeting in Oct 30-31.

"The current situation where the inflation rate doesn't seem to be accelerating toward 2% should be taken seriously," one member said.

"Although Japan's economy has continued its moderate expansion, the momentum towards expansion has weakened somewhat recently due to effects from events such as the natural disasters and trade conflicts between the U.S. and China," another member said.

However, the board members didn't discuss additional easing policy and largely shared the view that the BOJ should maintain the current powerful easing policy.

Other key opinions from the meeting summary:

--"Against the background of trade frictions and rising U.S. interest rates, the global economy is beginning to level off. Uncertainties regarding such developments as protectionist moves and negotiations on the Brexit have heightened since the previous meeting."

--Japan's consumer prices are expected to continue improving. But the recent movements "have been weak and unstable. It is projected that achieving 2% inflation will take some time."

--"It is important to consider in a flexible manner such factors as the range of yield movement and the target maturity of Japan Government Bonds in conducting yield curve control, while maintaining the framework of monetary easing."

--"Since regional financial institutions have increased relatively high-risk loans such as those to mid-risk firms amid the decreasing trend of lending rates, their profits could worsen faster if the economy moves into a downturn and credit costs increase. These points warrant careful attention."

--As a policy tool for addressing the problem of a decline in the functioning of financial intermediation, the importance of policy prudence should not be overlooked, although some suggest focusing on such monetary policy factors as changing the target level of interest rates.

--"There is also possibility that the degree of transmission from the output gap to prices has weakened. In this situation, the transmission channel of inflation through the adaptive formation mechanism may take longer to fully start working."

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
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