BoJ released minutes of the June 14/15 meeting today (not the one earlier this week). The discussions during this meeting were of much less important to the one on July 30/31, after which BoJ announced strengthening of the easing framework. Nonetheless, there were still some interesting points to note.
One member questioned that BoJ’s credibility and commitment of achieving the 2% inflation target was undermined “because the description on the timing of reaching around 2 percent inflation had been deleted from the April 2018 Outlook Report.” And there communication strategy was a deeply discussed topic. There was consensus on emphasizing the bank’s commitment to achieving price stability.
The minutes also noted the “sluggish growth in the CPI since the start of fiscal 2018”. Some members pointed to “short term factors” including Yen’s appreciation. Theses members also pointed to “increasingly competitive environment surrounding the retail sector”. Some members took a long-term perspective and attribute to ” the fact that the mindset and behavior based on the assumption that wages and prices would not increase easily had been deeply entrenched among firms and households.” One member said inflation was constrained by “social mode” which was brought about by “prolonged period of low growth and deflation”.
On risks the minutes noted US economic policies, Brexit and geopolitical risks as the main ones. In particular, “a few members said that, although the U.S. protectionist trade policy had been criticized at international conferences such as the Group of Seven (G-7) meetings, there were no pronounced signs at the moment that the situation surrounding the policy would improve.”
