BOJ Bulldozes Massive Easing despite Little Yield in Late 2015: Minutes

Tokyo, Jan. 28 (Jiji Press)–The Bank of Japan forced ahead unprecedented qualitative and quantitative easing despite its failure to overcome deflation in the country more than two years after the introduction of the massive easing policy, the minutes of the central bank’s Policy Board meetings in the second half of 2015 showed Wednesday. When the bank adopted the policy in April 2013 under then Governor Haruhiko Kuroda, it set a goal of achieving stable inflation around 2 pct in some two years. However, little progress had been made, due in part to falling energy prices. At the meeting on Oct. 30, 2015, the board pushed back the goal from around the first half of fiscal 2016 to around the second half of the year through March 2017. “Affected by the current situation, expected inflation rates are not picking up (as well as the core consumer price index),” member Koji Ishida pointed out, according to the minutes. To facilitate the continuation of the easing, the policymaking body decided at the Dec. 18 meeting the same year to introduce supplementary measures, including boosting buying of exchange-traded funds and newly purchasing Japanese government bonds with longer remaining maturities. But the additional measures were opposed by some of the nine members. “They are not monetary policy steps a central bank can take,” Ishida argued. Echoing him, Takahide Kiuchi said the JGB buying expansion “would put fresh pressure on the bond market” and that the BOJ’s “involvement in trading in specific ETFs is undesirable in terms of the bank’s neutrality to private-sector activities and of sound pricing.” Takehiro Sato noted that those measures would make it difficult for the bank to achieve a “soft landing” of the extraordinary policy. In his counterargument, Kuroda emphasized that the measures “will further smooth asset purchasing under the quantitative and qualitative easing.” Expressing a concurring opinion, Yukitoshi Funo said supporting private-sector capital and human resource investments through the expanded ETF purchase program “would contribute to the promotion of a virtuous circle” in the Japanese economy. The supplementary measures were adopted by a majority vote, followed by the decision a month later to implement the unorthodox “negative interest” policy. The BOJ has yet to achieve the 2 pct price stability. END [Copyright The Jiji Press, Ltd.]