MNI POLICY: BOJ Opinions: Members Call For Swift Policy Action

A number of Bank of Japan board members emphasized the need to take additional easy policy measures in an appropriate manner, while carefully monitoring developments in financial markets at the October 28-29 policy meeting, the summary of opinions at the meeting released on Monday showed.

"It is necessary for the BOJ to continue to make policy responses swiftly and appropriately as needed while firmly maintaining cooperation by, for example, exchanging information with the government and other major central banks," one member said.

Another member said, "The BOJ should exercise utmost vigilance against the possibility of a sudden change in financial markets and make policy responses flexibly when necessary, taking into account the effects of such a change on economic activity and prices," the summary showed.

At the meeting, the BOJ decided to leave policy setting unchanged but revised down the median forecasts for real economic growth and the inflation rate this fiscal year.

Other key points from the summary of opinions:

MONETARY POLICY

One member said, "While the current policy responses have had positive effects, it is still the top priority to ensure corporate financing and sustain employment. In addition, if economic recovery is delayed, credit risk might materialize, leading to a risk on the financial system side. Thus, due attention should be paid to such possibility."

Another member said, "If COVID-19 spreads again and economic activity is pushed down, the CPI could stay in negative territory for a protracted period and deflation might take hold. This possibility warrants attention in conducting monetary policy."

Another member said, "From the viewpoint of simultaneously achieving containment of the spread of COVID-19 and improvement in economic activity during the COVID-19 era, it is necessary for the Bank to deeply discuss policy responses that aim at achieving the price stability target of 2%."

INFLATION RATE

One member said, "It is not assessed at present that price cuts that aim at stimulating demand have been observed widely. However, firms' price-setting behavior could be affected if the employment and income situation of households becomes more severe, and thus the Bank will closely monitor future developments."

Another member said, "The BOJ should be vigilant against the downside risks to prices and inflation expectations that reflect, for example, the employment and income situation remaining at a low level and possible turmoil in financial markets stemming from overseas developments."