Investing.com -
Investing.com - The Bank of Japan board sees the output gap improving, according to minutes of the April board meeting released on Friday, but also concern about the ability to hit a target of 2% sustained inflation in the coming year.
"Some members expressed the view that the start of a reduction in the BoJ's paces of asset purchases at this point - when Japan's economy was still on its way to achieving the price stability target of 2% - was likely to constrain the effects of its policy measures," the minutes showed.
"A few members noted that, considering that Japan's economy was at a stage where the path toward overcoming deflation had come in sight at last, the highest priority at this point should be given to avoiding the risk of the economy falling back into deflation."
One member said due attention should be paid to the communication regarding a reduction in the BoJ's asset purchases, as such communication could diminish the beneficial monetary easing effects depending on its timing and method.
At the April 7-8 meeting, the BoJ board decided by an 8 to 1 vote to leave the bank's policy target unchanged while Kiuchi, who opposed the Oct. 31 easing, called for an even lower stimulative target than the one before the last easing.
Previously, Kiuchi had proposed the BoJ should maintain the high degree of easing only during the two-year period from April 4, 2013 so that it is not overdone. He had also said the policy target before the Oct. 31 easing was "appropriate."
Now that the two-year period is over, Kiuchi proposed that the BoJ should "conduct money market operations and asset purchases so that the monetary base and the amount outstanding of its JGB holdings will increase at an annual pace about ¥45 trillion." His proposal was voted down by the rest of the board.
The BoJ will continue to increase its purchases of Japanese government bonds at an annual pace of about ¥80 trillion.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.