Some Bank of Japan policymakers believe the effects of the central bank’s ultra-easy monetary policy might be “diminishing,” referring to a temporary rise in long-term interest rates last month, minutes from its June policy meeting show.
Views on the matter were divided, however, during the June 18-19 meeting, with some members saying the effects “continued to be substantial,” given low and stable interest rates “despite the rise in overseas interest rates,” according to the minutes released Tuesday.
The meeting came a week after the country’s key long-term interest rate hit a nine-month intraday high of 0.545 percent, echoing rises in European and U.S. equivalents. The yield on the benchmark 10-year Japanese government bond has since fallen below 0.5 percent.
The policymakers mentioned the move as a temporary rise to the range of 0.5 to 0.6 percent, according to the minutes, as the BOJ aims to keep interest rates low through massive asset purchases to stimulate lending and boost capital investments.
On the domestic economy, some policymakers said Japan’s economic growth rate was likely to show a temporary decline in the April to June period, reflecting a slowdown of overseas economies, but would increase thereafter as the “virtuous cycle from income to spending continued.”
On the Chinese economy, one member noted “signs of a slowdown were becoming somewhat more evident,” but policymakers shared the view that the economy was likely to “follow a generally stable growth path” as authorities carried out policy measures to support the economy while proceeding with structural reforms.
Such policy measures may not have as much of an effect as before, however, as they mainly take the form of public investment, one member warned.
On their decision to reduce the number of policy meetings starting next year and release economic and price forecasts on a quarterly basis, many members said such a framework had been adopted widely by major central banks and was appropriate, according to the minutes.