The member of the Bank of the Bank of Japan (BOJ) shared his opinions on the perspectives of monetary policy on Friday, according to the minutes of the May meeting of the BOJ.
Outstanding statements
Many members said they must carefully examine the commercial policy of each nation and its development given the increase in downward risks for the economy and prices.
Some members said the Boj must maintain very low real interest rates to support the economy.
A member said that the BOJ had no choice but to wait and see until the US commercial developments stabilize.
A member said that recent tariff developments could push Japanese companies to embark on excessive cost cuts, limit salaries and investments.
The members agreed that it was appropriate for the BOJ to continue increasing interest rates according to the improvements in the economy and prices if the forecasts of the BOJ materialize.
Some members said it was appropriate to continue increasing interest rates since BOJ projections aim to achieve their 2%inflation target.
A member said that the probability that the underlying prices of Japan fall again is small.
A member said that the BOJ could pause the increase in rates temporarily, but it must be ready to increase rates again depending on changes in US policy.
Market reaction to Boj Proceedings
At the time of writing, the USD/JPY was lowering 0.12% in the day to 145.25.
Japan Faqs Bank
The Bank of Japan (BOJ) is the Japanese Central Bank, which sets the country’s monetary policy. Its mandate is to issue tickets and carry out monetary and foreign exchange control to guarantee the stability of prices, which means an inflation objective around 2%.
The Bank of Japan has embarked on an ultralaxa monetary policy since 2013 in order to stimulate the economy and feed inflation in the middle of a low inflation environment. The bank’s policy is based on the Quantitative and Qualitative Easing (QQE), or ticket printing to buy assets such as state or business bonds to provide liquidity. In 2016, the Bank redoubled its strategy and relaxed even more policy by introducing negative interest rates and then directly controlling the performance of its state bonds to 10 years.
The massive stimulus of the Bank of Japan has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to combat inflation levels that have been in historical maximums. Japan Bank’s policy to maintain low types has caused an increase in differential with other currencies, dragging the value of YEN.
The weakness of the YEN and the rebound in world energy prices have caused an increase in Japanese inflation, which has exceeded the 2% objective set by the Bank of Japan. Even so, the Bank of Japan judges that the sustainable and stable achievement of the 2%objective is not yet glimpsed, so an abrupt change of current monetary policy seems unlikely.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
