BOJ summary of opinions: Prolonged Yen appreciation will threaten inflation goal

Bank of Japan (BOJ) is worried that a further appreciation in Yen and the the decline in stock prices would produce negative wealth effect for households and industries and hence would make it difficult for the central bank to achieve its 2 percent inflation target,  the summary of opinions of the March meeting released today showed. 

Key points (Source: BOJ)

The momentum of inflation is not strong enough to achieve the price stability target of 2 percent early.

It is appropriate to pursue powerful monetary easing with persistence under the current guideline for market operations in order to firmly maintain the momentum toward achieving the price stability target.

This is not the phase in which the Bank should consider "normalization" -- that is, gradually reducing the degree of monetary accommodation -- in a concrete manner.

The Bank needs to explain to market participants so that they can fully understand that "normalization" is still in the process of monetary accommodation and completely different from monetary tightening, which aims at reducing the positive output gap. Such explanation will also be beneficial in smoothly proceeding with "normalization" in the future.

If there is a heightened risk that achieving the price stability target will be delayed, additional monetary easing will be needed; however, as there is not ample room for further monetary easing, fiscal policy is also necessary in overcoming deflation.

The weak recovery in household consumption since last summer is of concern. It is necessary to pay due attention to the extent to which the favorable effects resulting from an increase in exports spread to the household sector through wage increases.