Unease Grows at Bank of Japan as Oil Casts Shadow on Prices
(Bloomberg) -- Unease has strengthened within the Bank of Japan’s policy board over the outlook for prices as cheaper oil and mobile phone charges threaten to drive inflation back toward zero and possibly back into negative territory.
A summary of opinions from board members at the Dec. 19-20 meeting released Friday shows a switch in mood from the guarded optimism over prices at the October policy meeting. The BOJ left policy unchanged at both meetings.
Falling oil prices are a matter for concern and will contribute to a further delay in reaching the central bank’s 2 percent inflation target, according to individual opinions of board members. The summary doesn’t clarify who made each comment.
A previous view that the central bank should consider whether keeping long-term bond yields at zero would weaken inflation expectations didn’t appear in the summary, giving the release a more dovish tone. One member said a move too early to tighten policy might end up exacerbating the side effects of policy.
The slide in oil prices in recent months will take several months to fully feed into overall energy costs in nationwide inflation.
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