Bank of Japan policymakers see the need to maintain ultra-easy policy as inflation is rising only modestly and wage growth remains feeble, a summary of opinions from their October meeting showed on Monday.
The nine-member board also sounded sanguine about recent yen declines, with one member saying it reflected the differentials in the inflation and monetary policy stances between Japan and other countries.
Supply constraints and rising global commodity costs have pushed up inflation across the globe, prodding some central banks to raise interest rates or ponder withdrawing stimulus.
While rising energy and food costs are pushing up prices in Japan, inflation remains well below the BOJ’s 2% target as weak consumption discourages firms from passing on higher costs to households.
“Monetary policy will be normalized in Japan when the price target is achieved in a stable manner irrespective of policy developments in other economies,” one member was quoted as saying in the summary. “Given the target has not been achieved, there is absolutely no reason to adjust monetary easing.”
Some BOJ members did point to signs inflationary pressures are building up in Japan as the economy benefits from the lifting of state of emergency curbs on Sept. 30, the summary showed.
The BOJ board also discussed recent yen declines, with one member saying the impact could vary depending on company size and sector, the summary showed.
At the Oct. 27-28 meeting, the BOJ kept policy steady and retained its view the economy was headed for a moderate recovery as the impact of the COVID-19 pandemic begins to subside.
The central bank is expected to decide as early as its next meeting in December whether to extend a March 2022 deadline for its pandemic-relief funding programs.
Several members pointed to improvements in corporate funding and the distortion the BOJ’s corporate bond purchases could be causing in markets, the summary showed, a sign some in the BOJ may have become more open to ending some programs.
“The impact of COVID-19 on corporate financial positions is becoming limited to those in industries facing subdued sales as well as small and medium-sized firms,” one member said.
“The BOJ will continue to examine relevant data, such as the tankan survey for December, to see whether improvement in corporate financing will become widely observed.”
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