JP: BoJ MPB Minutes

Sun Nov 05 17:50:00 CST 2017

The Bank of Japan has published the minutes of the meeting of the Monetary Policy Board held September 20 and 21 At this meeting, members of the MPB 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. Members 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. Members voted 8-1 in favour of the decision to keep policy settings unchanged..

Consistent with the statement published immediately after the September meeting, the minutes note that officials considered the Japanese economy had been "expanding moderately" and will likely continue to do so. Accommodative monetary policy and fiscal stimulus was expected to drive a "virtuous cycle" from income to spending, with stronger global growth also expected to support export growth. Most officials also expected the year-on-year change in the consumer price index (excluding fresh food) to "continue on an uptrend" towards 2.0 percent in response to an improvement in the output gap and stronger inflation expectations.

The policy settings retained at the September meeting were also left unchanged at the BoJ's subsequent policy meeting, held last week. Officials also published revised inflation forecasts after the meeting held last week. Japan's economy is projected to "expand moderately" with the median forecast for real GDP growth revised from 1.8 percent to 1.9 percent for the fiscal year starting April 2017, left unchanged at 1.4 percent for the fiscal year starting April 2018, and left unchanged at 0.7 percent for the fiscal year starting April 2019.

Officials, however, now expect inflation in the near-term will be weaker than previously anticipated, mainly reflecting the impact of lower mobile phone charges. The year-on-year change in the consumer price index (excluding fresh food) is now forecast to be 0.8 percent in the current fiscal year (down from the previous forecast of 1.1 percent) and to be 1.4 percent next fiscal year (down from the previous forecast of 1.5 percent). Excluding the impact of a planned sales tax increase, this measure of inflation is forecast to be 1.8 percent in the fiscal year starting April 2019 (unchanged from the previous estimate). Based on these revised inflation forecasts, the BoJ still expects to meet its inflation target sometime "around" the fiscal year starting April 2019.

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.