BOJ Summary of opinions: Must maintain powerful easing

Omkar Godbole FXStreet Contributor

The Bank of Japan (BOJ) is nowhere close to the 2 percent inflation target and hence must maintain powerful easing, the BOJ summary of opinions released today showed.

Key points (Source: Reuters)

BOJ must maintain powerful monetary easing as still some distance to its price target
BOJ must mull appropriate policy without the preset idea, looking at output gap, impact of its policy on financial system
Must further scrutinize appropriate shape of yield curve as impact of BOJ's policy on bank profitability increases
If BOJ hikes rates, that will hurt corporate profits via yen rise, hurt financial institutions by increasing credit costs
It's true BOJ is buying ETF, risky assets as part of efforts to hit price goal but must look at both merits, potential demerits of this move
BOJ must gain public understanding it could adjust policy flexibly, offer clear explanation on what 'exit' and 'policy normalisation' mean
No change to BOJ's stance of seeking to hit 2 pct inflation at earliest date possible
Worried that dropping phrase on timing for hitting price goal could weaken BOJ's commitment to hitting price goal
Boj should do more study, debate on how to strengthen its commitment to meeting price goal
One idea could be for BOJ, govt to take coordinated action if risks hampering the achievement of price goal materialise
Will take some time for inflation to reach 2 pct
Impact of next year's sales tax hike likely smaller than prior hike but must watch impact on consumer sentiment, inflation expectations
Watching with alarm chance that potential tightening of u.S. Financial conditions could affect emerging economies, disrupt global markets

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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