Some Bank of Japan policymakers maintained a cautious stance on the central bank’s prediction that consumer prices are likely to come close to its 2 percent inflation target from the end of fiscal 2014 to fiscal 2015, the minutes of the January policy meeting showed Friday.
As in the outlook released at the October meeting, “A few members held a more cautious view of the outlook for prices compared with forecasts in the baseline scenario, mainly as it seemed highly uncertain whether changes in inflation expectations would lead to a rise in the actual rate of inflation,” the minutes of the Jan. 21-22 meeting said.
While many members said the year-on-year price increases were likely to be around 1.25 percent for some time, one member argued the pace of increase “could slow by more than expected” if a reversal in the yen’s recent depreciation trend occurs, as the effects of the weakening yen on prices could have become larger.
At the meeting, the central bank kept its consumer price outlook for fiscal 2015 unchanged at 1.9 percent, retaining the view that the rate was likely to reach around 2 percent toward the latter half of the projection period, from fiscal 2013 through fiscal 2015.
On the prospects for emerging economies, many members said they continued to “warrant attention” because some of those economies faced structural problems, such as current account deficits. Some members said the lack of momentum in Japan’s exports despite the weakening of the yen “reflected developments in overseas economies, such as the relatively weak business fixed investment in these economies.”
But members agreed that exports were likely to increase moderately on the back of the recovery in overseas economies, the minutes said.
To avoid any misunderstanding that the bank will continue its large-scale monetary easing only for two years, many members said it was necessary for the bank “to provide a clear explanation that it did not strictly set this to end in two years,” the minutes said