BOJ Minutes Show Board Spurned Kiuchi's Calls to Taper

        TOKYO--The Bank of Japan's toughest inside critic of aggressive easing measures met with stiff resistance from other policy-setters when he proposed slashing the bank's asset purchases at a policy meeting in early April, minutes from the meeting released Friday showed.
        The summary of discussions during the April 7-8 gathering signaled the resolve of a majority of the central bank's nine board members to continue with aggressive asset purchases despite their perceivably limited effects on stopping inflation from drifting lower.
        At the meeting, board member Takahide Kiuchi called on the BOJ to immediately cut its annual Japanese government bond purchase target by almost half to Y45 trillion ($375 billion) a year.
        Offering more details on Mr. Kiuchi's proposal, the minutes showed that he also urged slashing the purchases of exchange-traded stock funds by 67% to Y1 trillion, real-estate investment funds by the same degree to Y30 billion. Those are the levels at which the BOJ launched two years earlier what it called monetary easing of a "different dimension." Mr. Kiuchi's proposal was defeated by a 8-1 vote.
        In spurning Mr. Kiuchi's ideas, "some members" said that reducing asset purchases before the bank's 2% inflation target was achieved would likely "constrain the effects" of the policy steps, the minutes showed. Japan's primary inflation gauge stood at 0.2% in March, according to government data.
        "A few members" also noted that the "highest priority at this point should be given to avoiding the risk of the economy falling back into deflation," according to the minutes. One of them added that there was "currently no concrete evidence" of financial imbalances building,
        "One member" warned that communication over cuts in the asset purchases "could diminish the beneficial monetary easing effects."
        The minutes don't identify speakers by name.
        Mr. Kuichi is concerned that the central bank could soon reach a point beyond which its easing steps would produce more unwanted side effects, such as destabilizing the bond market or causing bubbles, than benefits for the economy. Mr. Kiuchi has been the lone dissenting vote on the board since the BOJ expanded its asset purchases in late October.
        Write to Takashi Nakamichi at takashi.nakamichi@wsj.com
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        (END) Dow Jones Newswires

        May 07, 2015 21:50 ET (01:50 GMT)

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