In the summary of opinions at the June 14/15 BoJ monetary policy meeting, the central noted that the economy is “expanding moderately”. But it also cautioned that the effect of US “protectionist trade policy” warrant “close attention”. In addition to that, other concerns include “political situation in southern Europe and volatile
movements in some emerging markets. Though, the latter have “limited” effects on the global economy at this point.
Regarding inflation, BoJ noted that “upward pressure on wages has been weak despite the increased tightness in the labor market”. And, “if wages do not rise in line with inflation, this would pose a burden on people.” BoJ said “close attention should be paid to developments in labor productivity and real wages, while taking into account mainly the effects of a reduction in overtime work hours under working-style reforms.”
On monetary policy, since there is “still a long way” to meet 2% inflation target, it is “appropriate to pursue powerful monetary easing with persistence under the current guideline”. But BoJ also noted that “the reason for the sluggishness in prices is unlikely to be merely a shortage of demand”. Therefore, “it is not appropriate to adopt a policy that would forcibly push up demand in a short period of time.
