BoJ Meeting Minutes: Financial conditions in Japan remain “accomodative”

The Bank of Japan (BoJ) has released the meeting minutes of the July 14th-15th policy meeting, though the impact is greatly muted after this week’s central bank statement saw broad adjustments to their current fiscal policies. The mid-July meeting minutes towed the familiar line for the BoJ of maintaining their current easing programs, and cementing the notion that Japan’s central bank is very far off from conducting any tapering operations or adjusting interest rates.

Key quotes

“Members concurred that financial conditions in Japan were highly accommodative.  They shared the view that, under Quantitative and Qualitative Monetary Easing (QQE) with  Yield Curve Control, firms’ funding costs had been hovering at extremely low levels and  financial institutions’ lending attitudes, as perceived by both large and small firms,  continued to be active.

With regard to conducting monetary policy, most members shared the recognition  that, although it was necessary to carefully examine the fact that firms’ wage- and  price-setting stance remained cautious, the momentum toward achieving the 2 percent price  stability target was being  maintained. As background to this, most members noted the  following two points: (1) firms’ stance was likely to gradually shift toward further raising  wages and prices with the steady improvement in the output gap, and (2) medium- to  long-term inflation expectations, which had been more or less unchanged recently, were  likely to rise steadily as further price rises came to be observed widely. One member  expressed the recognition that, in the current situation where the actual inflation rate had  been sluggish, it was difficult to gain understanding of the explanation that  the momentum  toward achieving 2 percent inflation was maintained, and therefore it was necessary for the  Bank to devise some ways to improve communication to the public.  

Most members shared the recognition that, as there was still a long way to go to achieve the  price stability target of 2 percent, it was appropriate for the Bank to pursue powerful  monetary easing with persistence under the current guideline for market operations in order  to firmly maintain the momentum toward achieving the price stability target.”