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BOJ minutes highlight debate over monetary policy

Posted by Akhilesh Ganti on May 26, 2013 8:30:00 PM

The release of the minutes of BOJ's April 26 meeting showed that there was a healthy debate on the implementation of their plan to boost money supply as they try to inflate their stagnant economy. A few of the salient points were:

  • A few members thought that their policies sent contradictory signals to the market which have resulted in the fluctuations seen so far. Their large-scale JGB purchases would lead to downward pressure on interest rates while their “strong determination” to meet their price target would lead to upward pressure on interest rates.
  • Some stated the need for a more proactive approach to avoid declining liquidity and wanted to make it clear that this policy is NOT financing government debt.
  • They were also cognizant of the difficulty in trying to achieve price target in 2 years with a few members voicing their skepticism on reaching the 2% price stability goal in the latter half of the projection period
  • Additionally, they felt that the bank should make a clearer statement on risk factors and emphasized the need for close communication when purchasing JGB's

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