Bank of Japan board at loggerheads on next policy move: Jan meeting minutes

[TOKYO] Bank of Japan policymakers disagreed on how quickly the central bank should ramp up monetary stimulus, minutes of their January rate review showed, as heightening overseas risks threatened to derail the country's fragile economic recovery.

While most members agreed it was appropriate to maintain the BOJ's current stimulus programme, one of them said the central bank must stress its readiness to take "quick, flexible and bold" action including additional easing, the minutes released on Wednesday showed.

"Given the timing of achieving the price target had been delayed, it was undesirable to adopt a stance of not taking action until a serious crisis occurred," the member was quoted as saying at the January meeting.

Another member, however, said acting too hastily during times of uncertainty could lead to financial imbalances and unnecessary swings in the economy, the minutes showed.

Some in the nine-member board also warned that an increasing number of regional banks could be taking excessive risks to secure profits as years of ultra-low interest rates hurt their bottom line.

While many members agreed that the benefits of the BOJ's policy exceeded the costs, the board debated effectiveness of the current programme in lifting prices.

One member said the BOJ's current yield curve control (YCC) policy has had only a limited impact in boosting prices and inflation expectations.

"This member said further analysis and consideration were needed on the relationships between inflation and the levels of interest rates or monetary base," according to the minutes.

At the January meeting, the BOJ kept unchanged its pledge to guide short-term interest rates at minus 0.1 per cent and long-term rates around zero per cent.

REUTERS