Some Bank of Japan policymakers said six weeks before the central bank expanded asset purchases that it shouldn't dismiss any options in combating risks from the European debt crisis, a record of last month's meeting shows.
The BOJ should "stand ready to take appropriate actions without ruling out any options in advance," minutes released Monday of the Aug. 89 Policy Board meeting show.
One member said the economy had "not yet overcome deflation" almost two years after the BOJ began comprehensive easing and the bank might need to "devise further ways to boost inflation expectations, such as exerting influence on foreign exchange rates."
The report shows growing sentiment to step up deflation-fighting efforts ahead of last week's unexpected decisions to boost the asset-purchase fund by ¥10 trillion and abandon a floor rate for bond purchases. The August and September meetings were the first to include board members Takahide Kiuchi and Takehiro Sato, economists who have indicated the BOJ should weigh adding stimulus to pull Japan out of more than a decade of falling prices.
At the August meeting, a different member said "the effects of monetary policy could be constrained if market participants began to question the bank's stance toward overcoming deflation," according to the minutes.
Policy Board members agreed the economy was likely to return to a moderate recovery path as "domestic demand remained firm and overseas economies emerged from the deceleration phase."