BOJ Policymakers Lean Towards Additional Monetary Policy Easing in the Face of Weak Inflation?
Arslan Butt • 1 min read
The summary of the BOJ’s latest monetary policy meeting reveals that some policymakers at Japan’s central bank were in favor of further easing of monetary policy in October. Some of the board members indicated the need to keep the monetary policy loose for some time on account of inflation remaining well below the 2% target.
In case inflation fails to pick up further and accelerate towards 2%, some policymakers felt there was a need to roll out additional stimulus measures. In the summary, one of the board members had highlighted that risks were tilted to the downside currently, which could require additional easing in monetary policy.
Markets had expected the BOJ to cut rates deeper into negative territory to accelerate inflation, but it chose to hold the monetary policy steady. However, the BOJ did tweak its forward guidance, indicating the possibility of more rate cuts if needed in the near future on account of rising external risks driven by trade tensions between the US and China.
Presently, the BOJ maintains short-term rates at -0.1% while the 10-year government bond yields are maintained near 0%. Japan’s central bank also purchases government bonds and risky assets in an attempt to boost inflation and bring it up to the 2% target.