Some Bank of Japan policymakers are becoming more vocal in expressing concerns about the economic outlook, threatening to pick away at what has been a unified public position of optimism key to the central bank's reflationary message.
The three policymakers on the nine-member board see more risks than their colleagues from Japan's planned increase in a domestic sales tax in April, a contentious issue Prime Minister Shinzo Abe must deal with after his resounding election victory on Sunday.They are also more concerned than the others about a slowdown in China's economic growth, which has become more apparent in recent months.
With the economy responding well to the Abenomics phenomenon of aggressive monetary policy, fiscal spending and the promise of economic reform, the pessimists see no imminent need for additional growth stimulus.
But their doubts may gain more traction next year once Japan feels the pinch of the sales tax hike and China's slowdown, and so undermine the BOJ's relatively upbeat message. The BOJ's economic forecasts project a stronger recovery than private analysts by some margin as the central bank targets turning years of deflation into 2 percent inflation in two years.
"Still, the pessimists have a point. Even the optimists aren't convinced that everything is on track. There's still a long way ahead to achieving 2 percent inflation."
The pessimists' concerns may also win over the board into taking stronger money market measures if government bond yields spike again, unlike in recent months when the central bank refused to be drawn into taking stronger measures as 10-year returns jumped to 1 percent from just 0.3 percent
Source: NewsonJapan
With the economy responding well to the Abenomics phenomenon of aggressive monetary policy, fiscal spending and the promise of economic reform, the pessimists see no imminent need for additional growth stimulus.
But their doubts may gain more traction next year once Japan feels the pinch of the sales tax hike and China's slowdown, and so undermine the BOJ's relatively upbeat message. The BOJ's economic forecasts project a stronger recovery than private analysts by some margin as the central bank targets turning years of deflation into 2 percent inflation in two years.
"Still, the pessimists have a point. Even the optimists aren't convinced that everything is on track. There's still a long way ahead to achieving 2 percent inflation."
The pessimists' concerns may also win over the board into taking stronger money market measures if government bond yields spike again, unlike in recent months when the central bank refused to be drawn into taking stronger measures as 10-year returns jumped to 1 percent from just 0.3 percent
Source: NewsonJapan
