BOJ Minutes: Members Warn of Soft Consumption

Some Bank of Japan board members warned that private consumption remained weak despite improvements in job markets, minutes of the bank’s early April meeting showed, underscoring a lack of conviction among policymakers over the strength of the economy.  The nine-member board shared the view that inflation expectations appeared to be rising as a whole “from a somewhat long-term perspective,” minutes of the April 7-8 rate review showed on Friday.

But some members acknowledged that annual consumer inflation might turn negative in coming months depending on energy price moves. Others pointed to the slow recovery in consumption and caution held by some companies on overseas developments, according to the minutes.  “Some members expressed the view that improvements in indicators of private consumption had lagged somewhat behind the improvement in employment and income situation,” the minutes noted. At the meeting, board member Takahide Kiuchi proposed tapering the BOJ’s asset purchases on the view that the cost of its stimulus program was already exceeding the benefits.

The proposal by Kiuchi, who voted against October’s monetary easing and had consistently called for making the BOJ’s stimulus a temporary framework, was turned down by a 1-8 vote.  Some members said tapering asset purchases now would diminish the effect of the BOJ’s stimulus given Japan has yet to achieve its 2 percent inflation target, the minutes showed.