The members of the Bank of Japan’s monetary policy board felt that the country’s economic recovery continued, minutes from the central bank’s meeting on August 6 and 7 revealed on Friday.
Private consumption was resilient and housing investment was also making progress, the board noted, while inflation expectations appear to be rising.
“Quantitative and qualitative monetary easing has been exerting its intended effects, and the bank will continue with QQE, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate,” the minutes said.
At the meeting, the BoJ decided to keep its monetary policy unchanged and also maintained its inflation and economic growth outlook. It also held its benchmark lending rate steady at 0 to 0.10 percent.
By an 8-1 vote, the policy board decided to maintain its target of raising the monetary base at an annual pace of about JPY 80 trillion.
Downside risks include commodity exporters and emerging markets, the bank said, as well as the pace of the economic recovery in the United States.
“Risks to the outlook include developments in the emerging and commodity-exporting economies, the prospects regarding the debt problem and the momentum of economic activity and prices in Europe, and the pace of recovery in the U.S. economy,” the minutes said.
Inflation is likely to be about zero percent for the time being, due to the effects of the decline in energy prices.
Core inflation was at meager 0.1 percent in June. Renewed fall in oil prices could weigh on inflation. Nonetheless, the bank aims to achieve its 2 percent inflation target by September next year.
“With regard to the outlook, Japan’s economy is expected to continue recovering moderately. The year-on-year rate of increase in the CPI is likely to be about 0 percent for the time being, due to the effects of the decline in energy prices,” the minutes said.
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