At the BOJ’s 14-15 June monetary policy meeting, the majority of BOJ board members voted to maintain the monetary policy status quo, points out Takashi Miwa, Research Analyst at Nomura.
Key Quotes
“Some observers think that the BOJ will look into the reasons for weak inflation and may lower its inflation forecast is a sign that the BOJ is taking into account the possibility that weak inflation could become entrenched, and that it may be setting up the conditions to normalize monetary policy even if inflation remains below its 2% target.
For our part, as with the removal from the April Outlook report of the statement that the price stability target was expected to be reached “around FY19,” we think it is more natural to interpret the BOJ’s discussion of unexpectedly weak inflation as part of its attempt to set the conditions for extending its current monetary policy regime over a longer period, including by subduing calls for additional easing even with inflation persistently below its price stability target.”
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