MNI BRIEF: BOJ Dec Minutes: Upside Risks To Economy, Prices

A few Bank of Japan board members pointed out upside risks to the economy and prices at the Dec 16-17 policy-setting meeting, the minutes released on Friday showed.

“A few members pointed out that, if it turned out that the Omicron variant was attenuated and more people gained a sense of assurance from, for example, the rollout of booster shots and an oral antiviral medicine, there was also a risk that pent-up demand would clearly materialise and the economy would grow faster than expected,” the minutes showed.

“The BOJ should clearly explain to the public that, if this became the case, it would not hesitate to take policy measures while cooperating with the government," one member said, while another added that "further coordination of fiscal and monetary policy was necessary and it was appropriate for the Bank to revise the forward guidance for the policy rates to relate it to the price stability target.”

However, one Bank of Japan board member said long-term inflation expectations had not been anchored to the 2% price target.

“One member expressed the recognition that the inflation level currently being seen in Japan was largely due to rises in prices of crude oil and commodities, and that medium- to long-term inflation expectations had not been anchored to the price stability target of 2%,” the minutes showed.

“Adjustment of monetary easing measures at this juncture was premature, as it could hinder the economic recovery from the pandemic and bring about an economic downturn and a decline in prices,” the member said.

At the January meeting, the BOJ ruled out any changes to easy policy for now, see: MNI STATE OF PLAY: BOJ Kuroda Rules Out Early Tightening.