MNI BRIEF: BOJ Member Pushed For Policy Review At Dec Meeting
One Bank of Japan member emphasised the need to review policy and examine positive and side effects of easy policy at the December 19-20 meeting, the Summary of Opinions released by the BOJ showed on Wednesday.
“Although it is appropriate to continue with monetary easing at this point, it is necessary to examine this at some point in future and assess the balance between positive effects and side effects,” one member said. (See MNI BRIEF: BOJ Concerned BY Market Functioning At Dec Meeting)
The comments were made at a meeting where the BOJ decided to lift the band on its 10-year bond yield target to 50bp from 25bp. (See MNI BOJ WATCH: Kuroda Dismisses Shock Shift As Tighter Policy)
“Since fund management and financing have continued to be based on the assumption that interest rates will remain low for a long period, in the phase of an exit from the current monetary policy, it will be necessary to examine where the risks associated with a rise in interest rates lie and whether market participants are well prepared," a different member said.
Another member said "there has been an argument that the price stability target of 2% needs to be reviewed and examined, including the validity of the numerical target value. However, revision of that value is not appropriate since it could make the target ambiguous and the monetary policy response inadequate.”
One member pointed out a strength of the momentum of inflation. "Inflation in prices of not only goods but also services has gradually risen, and the trimmed mean and weighted median of the year-on-year rate of change in the CPI have seen a further rise. This suggests a possibility that the momentum of inflation has started to strengthen.”
Another member said consumer prices in Japan "are approaching the state seen before the deflationary period", highlighting the price change distribution for CPI items and by the level of the CPI excluding fresh food and energy. "This could be considered a sign of progress toward achieving a situation where Japan's economy will not return to deflation.”