BoJ released the summary of opinions at October 30/31 monetary policy meeting today. There the central reiterated that the economy is “likely to continue expanding”. It noted “positive momentum in domestic demand”. The September Tankan survey also “reconfirmed enterprises’ strong fixed investment stance”.
However, momentum of the expansion “weakened somewhat” recently due to natural disaster and US-China trade conflicts. BoJ also pointed out that recent stock prices fall “large for external demand-oriented firms” and “small for domestic demand-oriented firms”. Therefore, “the fall in stock prices certainly seems to reflect the effects of the trade friction to some extent.”
On inflation, BoJ maintained that CPI is “likely to continue accelerating moderately” but the developments have been “weak and unstable”. And, “rise in inflation has been delayed with a positive output gap” as inflation mechanism is becoming “complex”.
On monetary policy, BoJ noted “t is important to consider in a flexible manner such factors as the range of yield movement and the target maturity of JGBs in conducting yield curve control, while maintaining the framework of monetary easing.” This suggested policymakers are considering further tweak to the current framework.
