BOJ Minutes show belief that current monetary policy easing should be maintained (d'uh)

Bank of Japan April 2023 meeting Minutes

Headlines via Reuters:

• A few members pointed out that past price increases in commodities Commodities Commodities are assets that are either naturally grown or occurring in the environment. Most commonly this includes precious metals such as gold, silver, and palladium.Beyond metals, commodities can also focus on agricultural or industrial goods that are central to manufacturing or other sectors. This includes crude oil, copper, wheat, and others.Relative to other assets, commodities are an extremely complex form of investment, with many similarities and differences to existing products.Commodit Commodities are assets that are either naturally grown or occurring in the environment. Most commonly this includes precious metals such as gold, silver, and palladium.Beyond metals, commodities can also focus on agricultural or industrial goods that are central to manufacturing or other sectors. This includes crude oil, copper, wheat, and others.Relative to other assets, commodities are an extremely complex form of investment, with many similarities and differences to existing products.Commodit Read this Term and raw materials continued to be passed on to consumer prices with a time lag
• A different member said that, in addition to a pass-through of higher raw material prices, an increasing number of factors had contributed to firms raising their selling prices
• One member expressed the view that high wage increases could lead, for example, to an improvement in consumer sentiment
• A different member expressed the view that it was uncertain whether pent-up demand would materialize to an extent where it would make up for private consumption restrained during the pandemic
• One member expressed the view that, with labor shortages intensifying, high wage increases could be expected in 2024

• One member said firms that had raised the starting salaries for new graduates in fiscal 2023 seemed to be planning to raise wages to some extent in fiscal 2024
• One member expressed the opinion that wage growth in 2023 seemed to be partly attributable to temporary factors
• One member said signs of a virtuous cycle between prices and wages had started to be observed

• A few members said in order for CPI inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term to rise again toward 2% after decelerating, it was necessary for wage developments, firms' growth expectations, and medium- to long-term inflation expectations to improve
• Some members said while firms' price-setting stance had been changing, Japan's CPI inflation was rather unlikely to remain elevated

• Some members said it was appropriate for the bank to continue with the current monetary easing due to difficulty of assessing sustainability of future wage hikes, developments in inflation expectations
• A few members said it was necessary for the bank to continue to firmly support the momentum for wage hikes by maintaining monetary easing so that the nominal wage growth rate would rise sufficiently relative to prices
• One member said while achievement of price goal was coming into sight, it was appropriate that the bank continue with monetary easing for the time being since there were both upside and downside risks
• One member said signs of a virtuous cycle between wages and prices had started to emerge in Japan's economy
• The member continued that it was necessary for the bank to appropriately assess underlying developments in economic activity and prices so that its policy responses would not fall behind
• A different member said the BOJ needed to avoid abrupt changes in interest rates, humbly monitor price and wage developments, and make responses at the right moment

On YCC:

• Members pointed out that distortions on the yield curve were dissolving, agreed that there was no need to revise the conduct of yield curve control
• One member said the BOJ could consider revising the conduct of YCC, but it was appropriate to wait and see a little longer in light of the situation in global financial markets
• This member added that attention was warranted on upcoming bond market survey results
• One member said BOJ should be careful to ensure that revision to the forward guidance would not be viewed as its willingness to raise the policy interest rates

On relations between the government and Bank of Japan:

• The Ministry of Finance representative said Prime Minister Kishida and Governor Ueda recently shared the recognition that, with extremely high uncertainties, the government and the bank would nimbly conduct policies with eye on economic, price and financial developments
• MoF Rep said Kishida, Ueda agreed at this point, there was no need to change joint statement between govt, BOJ

Bolding above is mine, there are a few useful snippets in there. The last one, on the joint statement, was a very hot topic at the time. The speculation was that a change to the statement, to allow the BOJ more flexibility to dial back ultra-easy policy, was imminent. Nope, it was not.

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Full text is here: Minutes of the Monetary Policy Meeting on April 27 and 28, 2023

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The Minutes are preceded many weeks in advance by the 'Summary' of the meeting. The "Summary of Opinions" provides a concise summary of the views expressed by Policy Board members during the meeting. It does not attribute opinions to individual members but offers a general overview of the views held by the board.

For the April meeting the post is here:

• BoJ April Summary: uncertain global outlook means Bank must continue current easy policy

and the full text is here:

• Summary of Opinions at the Monetary Policy Meeting on April 27 and 28, 2023

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The April meeting was a bit of a fizzer:

• BOJ maintains YCC band unchanged, tweaks forward guidance

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