JP: BoJ MPB Minutes

February 2, 2017 05:50 CST

The Bank of Japan has published the minutes of its policy meeting held December 19 and 20. At this meeting, officials left policy settings unchanged, keeping the short-term rate for excess reserves at minus 0.1 percent and retaining the target level for the 10-year government bond yield at around zero percent. Officials also concluded that maintaining the BoJ's purchases of government bonds at an annual pace of Y80 trillion would be appropriate to meet their 10-year yield target.

Under the BoJ's recently-adopted policy framework, officials have undertaken to keep expanding the monetary base until inflation exceeds 2.0 percent and "stays above the target in a stable manner". At their December meeting, members of the Monetary Policy Board agreed that the most important factor driving their policy decision was whether the momentum towards achieving this target "was being maintained". Most members concluded that it was, and that the year-on-year change in the CPI was likely to increase toward 2.0 percent in the medium-term despite their view that it would likely remain close to zero for the time being.

Some members cited factors supporting their view that price pressures are likely to strengthen, including tighter labour market conditions, stronger private consumption, higher crude oil prices and the weaker local currency. It was also argued that the BoJ's recently-adopted commitment to overshooting its inflation target would likely provide a boost to inflation expectations.

Based on this assessment, a majority of members agreed that current policy settings remain sufficient to achieve the target over the forecast period, though they reaffirmed that changes would be made if considered appropriate. These policy settings were also left unchanged at the BoJ's subsequent policy meeting, held earlier this week. The statement accompanying this meeting noted that officials continue to expect the year-on-year change in the CPI to increase towards 2.0 percent and that the momentum towards meeting this target is maintained. The minutes of this week's meeting are scheduled for publication on March 22. The BoJ's next policy meeting is scheduled for March 15 and 16.

The Bank of Japan publishes minutes following its monetary policy board meetings with a four or five week lag. The minutes expand upon the BoJ's post-meeting announcement.

Investors who want a more detailed description of Bank of Japan opinions will generally read the minutes closely. The MPB may issue a statement after its monthly meeting but the minutes will be much more detailed. In particular they will reveal who voted for and against the Committee's decisions and provide a more detailed description of the MPB's thinking. As such, the minutes are a market mover as analysts parse each word looking for clues to future policy.

Once Every 3-4 weeks.