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Ending QE Early Would Be Hawkish... Right?

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MNI (London)
     TOKYO (MNI) - China's slowing economy and its impact on Japan was a seen as
a concern to some Bank of Japan board members, the minutes of the December 19-20
policy meeting released Monday showed.
     However, the BOJ didn't see the need to conduct additional easy policy, but
noted it would keep a close eye on both the pros and cons of current policy.
     At the meeting the BOJ board decided to stand pat on monetary policy,
voting 7-2 to leave yield curve control and asset purchases unchanged, with the
board seeing Japan's economy still expanding moderately, despite downside risks.
     The BOJ vowed to maintain its current easy policy "for an extended period
of time," taking into account uncertainties regarding economic activity and
prices, including the effects of the consumption tax hike planned for October
     Other key points from the minutes:
     --"Some members pointed out that attention needed to be paid to the fact
that some recent indicators suggested a deceleration in the (Chinese) economy,
such as decreases in exports and imports as well as automobile sales, although
this factor was hidden behind trade friction and therefore was some difficult to
     --"A few members said that attention was warranted on the possibility" the
recent drop in crude oil prices induced a decline in observed prices and
inflation expectations.
     --Some members said, "It was important to continue to carefully examine
whether temporary price fluctuations would affect developments in inflation
     --One member said, "the inflation rate was unlikely to increase toward 2%
as there was a low possibility that the output gap would continue to widen
within positive territory going forward, and the decline in crude oil prices
also would contribute to further delaying the achievement of the price stability
     --One member said, "there would be a need to take decisive measures
accordingly in the event that downside risks to the economy materialized."
     --"One member noted that there seemed to be some room for refusing the
current conduct of the JGB purchase operation, taking into consideration (1) the
large stock effect of reducing term premium reflecting the cumulative amount of
JGBs through purchasing long-term JGBs and (2) the low remaining ratio of newly
issued bonds in the JGB market."
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
MNI London Bureau | +44 203-865-3812 |
MNI London Bureau | +44 203-865-3812 |
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