Some Bank of Japan policymakers continued to hold a cautious view over the timing of achieving the central bank’s 2 percent inflation target, minutes of the July policy meeting showed Wednesday.
One member of the policy board pointed out that the effects of upward pressure on prices from the yen’s depreciation were “diminishing,” as rises in food prices were offset by slower increases in public utility charges, the minutes said.
In the July 14-15 meeting, the BOJ slightly lowered its outlooks for Japan’s economic growth and inflation, reflecting slowing exports and industrial output amid a tepid overseas economic recovery.
Many members maintained the view that the BOJ will likely attain 2 percent inflation by around September 2016, helped by a potential recovery in crude oil prices, according to the minutes.
Such optimism is largely due to growth in the consumer price index, excluding fresh food and energy, as well as to widespread moves among companies to raise sales prices, suggesting resilience in private consumption.
But a board member presented a conflicting view, arguing that “the rise in daily necessities such as food could weigh on households’ attitude toward consumption, which in turn could restrain price increases.”
Another member said it is “difficult to expect a rapid rise in people’s medium- to long-term inflation expectations” during fiscal 2016 through 2017 with an economic growth rate of 1 to 2 percent and the rate of wage increases below 1 percent.
On the Chinese economy, which was hit by a sharp decline in stock prices, many members said the impact of the development on private consumption in China will be “limited” since stocks do not make up a large part of financial assets held by Chinese households.
With the Chinese authorities expected to carry out stimulus measures to support the economy, a few members said such steps would involve public investment, adding the efforts would underpin growth but “might not have as much of an effect as before in terms of inducing exports from China’s trading counterparts.”
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