BOJ officials stress that Reuters must maintain an easy policy on weak inflation

By Leika Kihara

TOKYO (Reuters) – Bank of Japan (BOJ) politicians see the need to maintain an ultra-easy policy as inflation is rising modestly and wage growth remains weak, a summary of opinion polls at the October meeting showed on Monday.

The nine-member council also gave a good opinion on the recent yen fall, with one member saying it reflected differences in inflation and monetary policy stances between Japan and other countries.

Supply cuts and global commodity costs have raised inflation around the world, and central banks have pushed for considerations to raise interest rates or remove the stimulus.

Despite rising energy and food costs in Japan as prices rise, inflation remains well below the BOJ’s 2% target, with weak consumption advising companies to bring higher costs to their homes.

“Monetary policy will be normalized in Japan when the price target is achieved in a stable manner, regardless of the development of policy in other economies,” one member said in the summary. “Since the goal has not been achieved, there is no reason to adjust the money relief.”

Some BOJ members pointed to signs that inflationary pressures are emerging in Japan as the economy benefits from the September 30 removal of a state of emergency, the summary shows.

The BOJ board also discussed recent yen declines, with one member saying the impact could vary depending on the size and sector of the company, the summary shows.

At its October 27-28 meeting, the BOJ maintained a fixed policy and maintained its view that the economy was about to moderate as the impact of the COVID-19 pandemic began to wane.

The central bank is expected to decide before its next meeting in December for pandemic mitigation financing programs that will open in March 2022.

Several members noted in the summary the improvements in corporate financing and the distortion that the purchase of BOJ’s corporate bonds could cause in the markets, a sign that some BOJs may be more open to ending certain programs.

“The impact of COVID-19 is being limited to corporate financial positions in industries with low sales and small and medium-sized enterprises,” one member said.

“The BOJ will continue to look at important data, such as the December tank survey, to see if there will be a very noticeable improvement in corporate financing.”