JP: BoJ MPB Minutes

Thu Jan 25 17:50:00 CST 2018

The Bank of Japan has published the minutes of the meeting of the Monetary Policy Board held December 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 December meeting, the minutes note that members considered the Japanese economy had been "expanding moderately" and will likely continue to do so. The minutes also show that members remain confident that an improvement in the output gap and stronger inflation expectations will push inflation towards the 2.0 percent target over the next few years. Officials forecast the year-on-year change in the consumer price index (excluding fresh food) to be 0.8 percent in the current fiscal year and 1.4 percent next fiscal year. 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.

The policy settings retained at the December meeting were also left unchanged at the BoJ's subsequent policy meeting, held earlier this week. Officials' assessment of the growth and inflation outlook were also unchanged at this meeting. Speaking at the post-meeting press conference, BoJ Governor Haruhiko Kuroda noted that hitting the inflation target will still take a long time but also rejected the suggestion that the target could be lowered, arguing that doing so would risk a return to deflation. He also repeated that stronger wage growth would be required to meet the inflation target.

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.