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     TOKYO (MNI) - One Bank of Japan board member saw the need to prepare
further policy responses if downside risks to economic activity and prices
materializes, the summary of opinions from the bank's January 22-23 policy
meeting showed.
     BOJ board members were worried about growing downside risks to the global
economy but they judged the baseline recovery scenario was unchanged, and they
agreed to carefully monitor developments of economic and financial conditions,
the 'Opinions', released Thursday, showed.
     Another member saw the necessity "to devise ways to avoid a situation where
an expectation that no policy change would occur for the time being will be
fixed in financial markets amid successive downward revisions to the outlook for
     The BOJ kept monetary policy unchanged at the meeting, maintaining the view
that Japan's economy is expanding moderately despite emerging downside risks.
The BOJ vowed to keep the current easy policy "for an extended period of time."
     In the quarterly Outlook Report, published alongside the meeting outcome,
the BOJ revised down its inflation projection for fiscal 2019 to 0.9% from the
1.4% presented in October. The downgrade came following a run of weaker than
expected price data amid downward pressure from crude oil on consumer prices.
     The BOJ board also lowered the median inflation rate forecast for fiscal
2020 to 1.4% from 1.5%.  However, they maintained the assessment that momentum
toward achieving the 2% price target is maintained, although it isn't yet fully
entrenched. The bank remains vigilant over the inflation outlook, saying, "Risks
to both economic activity and prices are skewed to the downside."
     Other key points from the summary of opinions:
     --"If downside risks to economic activity and prices materialize, the Bank
should be prepared to make policy responses. Since achieving the price stability
target has been delayed, it is not desirable to adopt a stance of not taking
actions until a serious crisis occurs. Rather, a stance of taking swift,
flexible, and decisive actions, including additional easing, in response to
changes in the situation is desirable."
     --"In a situation where there are high uncertainties regarding economic and
price developments, it is important to sustain moderate economic expansion by
maintaining a positive output gap to the extent that an accumulation of
imbalances is avoided while carefully examining the balance between the positive
effects and side effects of the policy."
     --One member said, "The amount outstanding of Japanese government bonds
(JGBs) held by financial institutions has likely been close to the minimum level
needed as collateral, such as for funding. There seems to be some room for the
current conduct of JGB purchase operations to be revised, taking account of the
large stock of JGBs already purchased by the Bank."
     --"Further analysis and consideration are needed regarding the relationship
between factors such as the inflation rate and either the levels of short- and
long-term interest rates or the monetary base."
     --"Although hard data suggest that the trend in Japan's economy has been
firm, it also is true that some market participants hold excessively pessimistic
views." The same member said, "Risks to overseas economies have been
increasingly tilted to the downside, along with heightening uncertainties, and
there are concerns that some of them may materialize. In that case, fiscal and
monetary policies in each economy will be important but it could take some time
for the policy effects to emerge."
     --"With upward pressure on inflation resulting from a positive output gap
and downward pressure on inflation accompanying a rise in productivity existing
at the same time, a rise in inflation has been delayed, partly due to a decline
in crude oil prices, and the outlook remains highly uncertain."
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
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