By Leika Kihara
TOKYO (Reuters) – Bank of Japan policymakers appeared undeterred by increasing global debate on withdrawing crisis-mode stimulus, with some calling for the need to avoid a premature tightening of monetary policy, a summary of their debate at the July meeting showed.
Stronger-than-expected inflation has taken centre stage in the policy debate among major central banks including the Federal Reserve, sparking market expectations of a gradual but steady exit from coronavirus pandemic-relief measures.
With Japan’s economy still reeling from the pandemic, the BOJ must sustain its ultra-loose policy, one board member was quoted as saying in the summary released on Wednesday.
“Rising commodity prices could push up year-on-year growth in consumer inflation. But there’s still some distance to stably achieving our 2% inflation target, which means it’s important to avoid a premature monetary tightening,” another opinion showed.
“In Japan, it’s necessary to patiently continue with monetary easing to meet our price goal in cooperation with the government,” a third opinion showed.
The remarks highlight the dominant view among BOJ policymakers that recent global commodity inflation likely won’t spur broader rises in consumer inflation that would allow them to debate a near-term withdrawal of stimulus.
At the July 15-16 meeting, the BOJ kept monetary policy steady and extended the deadline for a loan scheme aimed at channeling funds to small firms hit by the pandemic.
The central bank also cut this fiscal year’s growth forecast as new emergency curbs to combat the pandemic hurt consumption, reinforcing expectations that it will lag global counterparts in dialing back its massive stimulus.
(Reporting by Leika Kihara; Editing by Sam Holmes)
