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BoJ Meeting Minutes reveal nothing new

The Bank of Japan (BoJ) have dropped their latest Monetary Policy Meeting Minutes, covering the central bank’s meetings from July 30th and 31st of this year, and the long-dated release schedule of the BoJ’s minutes leaves a significant gap between the internal meetings and any policy changes that might be undergone immediately following.

Key highlights (Source: Bank of Japan)

In the money market, interest rates on both overnight and term instruments had generally been in negative territory. 

Overseas economies continued to grow firmly on the whole. The U.S. economy had been expanding. The European economy continued to recover, albeit at a somewhat slower pace. Growth in exports had been decelerating, mainly reflecting past appreciation of the euro. 

With regard to emerging economies, the Chinese economy continued to see stable growth on the whole. 

With respect to overseas financial markets, investors’ risk-taking stance had become cautious, as evidenced, for instance, by the depreciation of the Chinese yuan and by declines in stock prices in many countries, mainly against the background of uncertainties over trade policy, especially between the United States and China. 

Inflation expectations had been more or less unchanged. Long-term real interest rates — calculated as long-term interest rates minus medium- to long-term inflation expectations — had been negative.

Regarding global financial markets, members shared the recognition that the markets had temporarily become unstable through early July, mainly against the background of uncertainties over trade policy, especially between the United States and China, but thereafter started to regain stability gradually. Many members, however, pointed out that investors’ risk sentiment could worsen again if trade friction between the United States and China intensified. 

As for prices, members concurred that the year-on-year rate of change in the CPI for all items less fresh food was in the range of 0.5-1.0 percent, and the rate of increase in the CPI for all items less fresh food and energy had diminished to the range of 0.0-0.5 percent, due partly to firms’ cautious wage- and price-setting stance. On this basis, they shared the recognition that, taking account of the recent underlying trend in the CPI, the year-on-year rate of change in the CPI continued to show relatively weak developments compared to the economic expansion and the labor market tightening.

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