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Only one member of the Bank of Japan’s nine-member Policy Board opposed introducing quantitative monetary easing by pumping up the money supply at its March 19 meeting, according to the minutes the meeting released Tuesday.

Eiko Shinotsuka told the meeting, “Given that the bank had consistently been against adopting a quantitative target on the grounds that the relationship between quantitative indicators and developments in the economy was not stable, the issue of changing the bank’s monetary policy has not been sufficiently discussed,” according to the minutes.

The Policy Board decided at the meeting to target cash balances held by financial institutions at the BOJ instead of short-term money market rates, by boosting the balance of commercial bank’s reserves at the BOJ to around 5 trillion yen from the current 4 trillion yen.

Shinotsuka proposed, however, the bank guide the unsecured overnight call rate to at or below 0.15 percent until the consumer price index — excluding perishables — registers a year-on-year increase of zero percent or more in a stable manner.

She also said the central bank should increase its outright purchases of government bonds to around 800 billion yen per month from the current 400 billion yen to enhance the flexibility of the BOJ’s market operations, the minutes say.

Shinotsuka, a former professor at Ochanomizu University, was replaced by Miyako Suda on April 1, who served as an economics professor at the private Gakushuin University.

The minutes also note that “a few members voiced concern that an increase in outright purchases of government bonds could have significant side effects depending on the way it was conducted.”

“They also shared the view that it was important to avoid misunderstandings by making it clear that the measure was not aimed at supporting government bond prices or government financing.”

Many Policy Board members shared the view that Japan’s economy was at a standstill, reflecting a fall in exports and production, and that it was becoming “unlikely that Japan’s economy would follow the standard scenario of a gradual recovery starting from the corporate sector,” according to the minutes.

The members also agreed that downward pressure on prices stemming from demand-side factors was intensifying and that it was becoming more likely that the economy would fall into a deflationary spiral.

Based on that assessment, the majority of members agreed that “as monetary policy alone was not sufficient to insure economic recovery, the bank should make it clear that it was essential to advance structural reform with determination in the financial system as well as in the economy and industry.”

Seiichiro Murakami, senior vice minister of finance attending the Policy Board meeting as the Finance Ministry’s representative, said the government agrees that monetary policy alone will not solve the problems of the nation’s economy.

He told the board the government will do its utmost “to address issues that need to be tackled to achieve economic and fiscal structural reform, including the disposal of nonperforming loans.”

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