Bank of Japan (BOJ) minutes:
- Japan economy likely to continue to recover moderately
- Most members agreed BOJ should continue with QE as long as necessary to meet 2% price target
- One member said BOJs easing should be restricted to about two years
- One member said speculation about protracted QE could lead to economic instability in the medium to long term
- One member said corporate profits, employment and income are improving significantly
- Members agreed that consumer spending is resilient, even though there are some fluctuations due to sales tax hike
- One member said front-loaded demand before sales tax hike in April was greater than last sales tax hike in 1997
- Many members said price gains are seen across a wide range of items and not just energy-related goods
- One member expressed concern that foreign exchange moves are having more influence on consumer prices
Headlines via Reuters
Link to full text (PDF)
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Recall that at this meeting there was no change in monetary policy at all and the bank reiterated its view that the economy was on track for a gradual recovery. The sales tax hike (from 5% to 8%) had been introduced a few days previously, on April 1, but the bank said it had taken expected demand volatility around the introduction into account in its projections.
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Meanwhile, in USD/YAWN, every man and his dog
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Added, from FastFT (gated) – they note that:
- BOJ holds a rather upbeat view of the economy
- Is indicating it doesn’t see any need to step up its already aggressive policy
- Minutes show boardmembers see “a virtuous cycle among production, income and spending”
- Members forecast that a pick-up in wages – a crucial goal for the bank to hit its 2 per cent inflation target – “was likely to become more evident.”
- Bank of Japan Governor Haruhiko Kuroda surprised many when he appeared upbeat after last month’s meeting, explicitly saying the economy wasn’t in need of further stimulus. The minutes offer further proof that the Governor’s view is widely shared among his colleagues.
