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TOKYO (MNI) - The Bank of Japan's policy-making board believes that because
the pickup in consumer prices has been slow due to uncertain growth prospects
and sluggish consumption, a continuation of the current monetary easing policy
is needed, according to the summary of opinions at the board's July 19-20
meeting released Friday.
Some members said there was no need to expand the scope of already
extensive monetary stimulus as the economy's modest recovery has continued
despite weak prices.
"The year-on-year rate of change in the CPI (all items less fresh food) is
likely to increase gradually toward 2%," one member said. "However, it is
anticipated that it will take longer than expected to reach 2%, as developments,
such as those in commodity prices and inflation expectations, have not been
sufficiently firm while the output gap has been positive."
Another member stated, "Room for a further increase in labor productivity
in the services sector remains large, and there is some way to go before the
tightening of labor markets leads to rises in wages and prices."
A different member said, "In order to achieve the price stability target of
2%, it is necessary to improve the output gap through an expansion of
consumption and make firms' price-setting stance bullish."
On monetary policy, one member said, "Although the CPI projections have
been lowered, the momentum toward achieving 2% is firmly maintained at this
point. Thus, additional monetary easing is not necessary and the BOJ should
maintain the current policy."
Another member said that the recent price developments had been sluggish
but that "the improving trend in economic activity has strengthened and the
momentum toward achieving the price stability target has been maintained.
Therefore, it is important to maintain the current monetary policy framework and
carefully monitor its effects."
At its July meeting, the BOJ board decided to leave its monetary policy
unchanged in a seven-to-two vote, retaining the yield curve control target it
adopted in September last year, while pushing back its estimate for achieving
its 2% inflation target by a year until "around fiscal 2019."
In its quarterly Outlook Report released after the meeting, the BOJ board
again revised up slightly its economic growth forecast for the next two years on
firmer global demand but revised down its projection for inflation through
fiscal 2019 as the pace of increases in wages and retail prices remains slow.
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