Members of the Bank of Japan’s monetary policy board believe that the country’s economic recovery is continuing at a moderate pace, minutes from the central bank’s October 30 meeting showed on Wednesday.
The bank noted that exports were basically flat, held back by the slowdown in China.
“Looking at movements in real exports on a quarterly basis, they had increased for three quarters in a row until the January-March quarter of 2015, followed by a decline in the April-June quarter, but had been more or less flat in the July-September quarter. By region, while exports to advanced economies maintained their moderate uptrend, albeit with fluctuations, those to emerging economies, particularly to East Asia, had shown somewhat sluggish movements,” the minutes said.
The members added that falling commodity prices were weighing on producer prices.
The central bank is targeting 2 percent inflation by the middle of the next year, although current inflation is nowhere near that level. Falling crude prices remain the primary culprit.
“Members concurred that the timing of reaching around 2 percent was projected to be delayed compared with the projection in the July 2015 interim assessment, but this was due mainly to the effects of the decline in crude oil prices, and the underlying trend in inflation had steadily been improving,” the minutes said.
At the meeting, the central bank kept its benchmark lending rate unchanged at 0-0.10 percent. It also decided by an 8-1 vote to maintain its target of raising the monetary base at an annual pace of about JPY 80 trillion and keep its asset purchase program unchanged.
“Domestic demand was likely to follow an uptrend, with a virtuous cycle from income to spending being maintained in both the household and corporate sectors, and that exports were likely to start increasing moderately on the back of emerging economies moving out of their deceleration phase. On this basis, they shared the recognition that Japan’s economy was likely to continue growing at a pace above its potential from fiscal 2015 through fiscal 2016,” the minutes said.
Also on Wednesday, the BoJ said that producer prices in Japan were up 0.5 percent on year in October.
That was shy of forecasts for an increase of 0.6 percent following the downwardly revised 0.5 percent increase in September (originally 0.6 percent).
On a monthly basis, producer prices added 0.1 percent after easing 0.2 percent in the previous month.
Among the individual components, prices were down for leasing, finance and postal services. Prices were up for advertising and real estate.
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