BOJ Summary of opinions: Must maintain powerful easing
|The Bank of Japan (BOJ) is nowhere close to the 2 percent inflation target and hence must maintain powerful easing, the BOJ summary of opinions released today showed.
Key points (Source: Reuters)
- BOJ must maintain powerful monetary easing as still some distance to its price target
- BOJ must mull appropriate policy without the preset idea, looking at output gap, impact of its policy on financial system
- Must further scrutinize appropriate shape of yield curve as impact of BOJ's policy on bank profitability increases
- If BOJ hikes rates, that will hurt corporate profits via yen rise, hurt financial institutions by increasing credit costs
- It's true BOJ is buying ETF, risky assets as part of efforts to hit price goal but must look at both merits, potential demerits of this move
- BOJ must gain public understanding it could adjust policy flexibly, offer clear explanation on what 'exit' and 'policy normalisation' mean
- No change to BOJ's stance of seeking to hit 2 pct inflation at earliest date possible
- Worried that dropping phrase on timing for hitting price goal could weaken BOJ's commitment to hitting price goal
- Boj should do more study, debate on how to strengthen its commitment to meeting price goal
- One idea could be for BOJ, govt to take coordinated action if risks hampering the achievement of price goal materialise
- Will take some time for inflation to reach 2 pct
- Impact of next year's sales tax hike likely smaller than prior hike but must watch impact on consumer sentiment, inflation expectations
- Watching with alarm chance that potential tightening of u.S. Financial conditions could affect emerging economies, disrupt global markets
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