Business News Asia
The Bank of Japan (BOJ) today published the minutes of its April meeting. It states that the yen’s decline was one of the main topics discussed by BOJ directors at their meeting that day. Some of the directors expressed concern that the yen’s volatility will make it difficult for the private sector to plan its business.
The meeting minutes state that some BOJ directors believe that the BOJ needs to convey to the market that BOJ policy is aimed at achieving stable inflation targets, not at controlling exchange rate movements.
The BOJ must also keep an eye on the development of commodity prices and the yen. It is not just a matter of keeping an eye on the impact on the economy and inflation.
“A few members said excessive fluctuations in the foreign exchange market over a short period of time, such as those observed recently, would raise uncertainties about the future and make it more difficult for firms to formulate their business plans,”the minutes showed.
The meeting minutes also state that several BOJ directors stressed the need for continued accommodative monetary policy. The rise in commodity prices due to the war in Ukraine is affecting the Japanese economy, which is dependent on imports.
At its April 28 meeting, the BOJ’s Board of Governors voted to maintain ultra-loose monetary policy, which includes keeping the policy rate at -0.1% and maintaining the target yield on 10-year government bonds at around 0%.
At its meeting that day, the BOJ lowered its forecast for Japan’s economic growth in 2022 to 2.9% from 3.8% and raised its forecast for the core consumer price index (CPI) to 1.9% from 1.1%.
The weak yen has become a new challenge for Japanese policymakers as it hurts the economy by driving up the already rising cost of importing fuels and raw materials.
The yen fell to a fresh 24-year low of 136.71 per dollar early Wednesday as investors continued to focus on the contrast between the BOJ’s ultra-loose policy and the Fed’s rate hike plans to combat rising inflation.
It was last traded at 136.32 per dollar.