In the Summary of Opinions at BoJ’s December 17-18 meeting, It’s noted that the economy is “not judged to have fallen into a deflationary situation again”. But year-on-year rate of core inflation has already turned negative due to “temporary factors”, and it’s likely to be negative for the time being.
However, there is a “risk” of the economy falling into deflation as “medium- to long- term inflation expectations have weakened somewhat”. Hence, “risks of sudden changes in financial markets, including foreign exchange rates, also continue to warrant attention.”
It’s “highly likely” to take more time to achieve the price target. Given that monetary easing will be “further prolonged” it’s important to to conduct an assessment for further effective and sutainable monetary easing.
One member warned, “if the economy falls into deflation again, positive economic developments, such as an increase in employment, will be hampered, and the opportunity for the economy to leap forward could be lost”
“The Bank should conduct the assessment with determination to never allow the economy to return to deflation.” the member added.
