Minutes from the Bank of Japan’s April policy meeting showed some members expressed misgivings over its negative interest rate policy.
“A few members argued that the negative interest rate policy would impair the functioning of financial markets and financial intermediation as well as stability of the JGB market,” according to records of the BOJ’s policy meeting on April 27 and 28, which were published Tuesday. JGB is a reference to Japanese Government Bonds.
Still, most members agreed that policy effects from its monetary easing with a negative interest rate would spread steadily to economic activity and that it was appropriate to examine the extent of their permeation because it could take some time for effects to become apparent, the minutes said.
The BOJ kept its monetary policy unchanged at the meeting, imposing a minus 0.1 percent charge on some of the reserves held by financial institutions at the central bank.
It again pushed back the time frame for achieving its 2 percent inflation target by six months and now aims to attain that goal in fiscal 2017.
The minutes said members discussed policy implications of downgrading its inflation outlook for fiscal 2016 from January, saying it was mainly attributable to downward revisions in projections for gross domestic product growth and wage developments.
The policy meeting was held amid concern about a strong yen and after major quakes rattled Kyushu, disrupting supply chains for some manufacturers.
BOJ Gov. Haruhiko Kuroda has said the bank will undertake additional easing to achieve the 2 percent inflation target.
Members recognized that risks to Japan’s economic activity and prices “remained skewed to the downside with high unpredictability regarding the outlook for the global economy and considerable uncertainty over developments in medium- to long-term inflation expectations,” according to Kuroda.
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