BoJ Minutes: Economic Recovery Remains On Track

Bankofjapan 042816

Members of the Bank of Japan's monetary policy board said that the country's overall economic recovery was unaffected by recent weak data, minutes from the bank's April 27 and 28 meeting revealed on Tuesday.

The members also felt that Japan faced several downside risks - not the least of which came from overseas economies.

"The economy was expected to head toward a moderate recovery, supported partly by the effects of the government's policies, while the employment and income situation continued to improve. However, attention should be given to the increased uncertainty in overseas economies," the minutes said.

They added that the inflation trend appears to be improving, although one member cautioned that the negative interest rates may be starting to impair the financial markets.

The bank had introduced negative interest rate in January in order to achieve its 2 percent inflation at the earliest possible time.

"Most members shared the view that the year-on-year rate of increase in the CPI was likely to accelerate toward 2 percent -- the price stability target -- as the underlying trend in inflation steadily rose," the minutes said.

At the meeting, the bank refrained from expanding its monetary stimulus and kept its negative interest rate unchanged.

The bank held its target of raising the monetary base at an annual pace of about JPY 80 trillion, and also kept the -0.1 percent interest rate on current accounts.

Also, in order to support financial institutions in disaster areas affected by the Kumamoto Earthquake to meet demand for funds for restoration and rebuilding, the bank today created a funds-supplying operation.

The BoJ will provide a JPY 300 billion loan at a zero interest rate to financial institutions.

"Through the implementation of the supplementary budget, the government would provide for expenses needed to support the people affected by the disaster, including allowances to secure housing," the minutes said.

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