TOKYO (MNI) – Many members of the Bank of Japan policy board showed
their flexible stance on future price rises, saying that it is necessary
for the central bank to accept some inflation as a safety margin,
according to the minutes of the April 30 policy-setting meeting released
on Wednesday.

This may be interpreted to mean that the BOJ policymakers will
likely tolerate a small rise in consumer prices and will not consider
taking policy action immediately after Japan’s consumer prices shows
signs of rising.

“Many members said that it was necessary to accept some inflation
as a safety margin that acts as a buffer against the risk of falling
into a vicious circle of declining prices and deteriorating economic
activity,” the minutes said.

The minutes also showed that most on the policy board feel that
the Consumer Price Index is an accurate measure of price pressures in
the Japanese economy.

“Many members expressed the view that no large measurement bias
remained in the CPI in Japan,” the minutes said.

As for the understanding of medium- to long-term price stability,
the minutes said: “The figure representing many members’ understanding
was around 1%, within a range of 0.5% to 1% in either direction.

The BOJ said on April 30 that its policy board voted unanimously to
leave the target for the overnight lending rate among commercial banks
unchanged at 0.1%, as widely expected.

At the same time, the BOJ board confirmed that Japan needs to
“strengthen the foundations for economic growth,” according to the
Statement on Monetary Policy released after the one-day policy-setting
meeting.

To this end, the board agreed that “it was necessary for the bank
to make new efforts to contribute to strengthening the foundations for
economic growth.”

The chairman of the board, Governor Masaaki Shirakawa, has told the
BOJ staff to “examine and report …. on possible ways to support
private financial institutions in terms of fund providing with a view to
strengthening the foundations for economic growth.”

hinoue@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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