BOJ members warned that the economic growth could slow down temporarily: May 27, 2015

Intra-Day Market Moving News (USD/JPY)
27 May 2015   01:14GMT

This morning BoJ released minutes of its Apr policy meeting. Reuters reported many BoJ board members said that risks to consumer prices are tilted downside due to uncertainty about long-term inflation expectations, consumer spending, and the output gap.

Members agreed that the risks to economic growth are balanced but they warned that growth could slow temporarily due to a nationwide sales tax increase scheduled for the start of fiscal 2017.

The BOJ pushed back the timing in achieving its inflation target at the Apr 30 meeting, and indications that many board members are uncertain about the price outlook could fan expectations for additional monetary easing later this year.

"With regard to the baseline scenario for prices, many members expressed the view that there was considerable uncertainty, mainly in developments in medium- to long-term inflation expectations, and risks on the price front were skewed to the downside," the minutes said.

The changed time frame for achieving 2% inflation at the meeting to around the first half of fiscal 2016, which will begins in April.
Previously, the BOJ's official view was that it could achieve its target sometime around fiscal 2015.
BOJ had to alter its time frame after a plunge in last year oil prices which had wiped out gains in the consumer price index.
A few members, however, disagreed with the new time frame, arguing that consumer prices would not meet the central bank's price target in fiscal 2017.

It also reflected the members had wanted to monitor if the annual changes in the near zero consumer prices will actually affect inflation expectations.

The BOJ has stood pat on monetary policy since expanding government debt purchases last October to prevent a slowing of inflation following the oil price slump from delaying achievement of its 2% inflation target.