USD/JPY made a fresh low to 109.47 following a data dump and he The Bank of Japan’s December meeting’s Summary of Opinions which have come in and stated that the BoJ expanded QQE after sales tax hike in 2014, might need to ramp up stimulus again depending on consumption trend.
Also, a Bank of Japan policymaker played down the chance of meeting a proposal by the International Monetary Fund to tweak the central bank’s 2% inflation target into a looser goal set in a range.
“The BOJ should constantly consider what works best as its policy framework. But the introduction of an inflation range target, such as that proposed by the IMF, could weaken its commitment to achieving the price target,”
– one of the BOJ board’s nine members was quoted as saying.
Key notes
Appropriate to maintain current policy as momentum for hitting price goal not heightening further.
Must look at side-effects of policy while maintaining current monetary easing.
We haven’t emerged from situation where BoJ must not hold any pre-set idea on policy as high uncertainty remains on global economic outlook.
BoJ must continue to examine feasibility of additional easing, prepare for next recession as among risk scenarios.
BoJ expanded QQE after sales tax hike in 2014, might need to ramp up stimulus again depending on the consumption trend.
Making BoJ’s price target a range, as proposed by IMF, could weaken BoJ’s commitment to achieving price target.
Interest rates appear to be rising recently, which could mean current policy may be insufficient in stimulating economy.
BoJ must modify its forward guidance on rates, bind it more strongly, specifically to BoJ’s price target.
Must be mindful of demerits of BoJ’s policy, impact on financial intermediation.
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