BoJ Minutes Show Japan Lags in Reaching Inflation Target

Hiruki Nakamura
26 Nov, 2013
New York City

The latest Bank of Japan policy committee meeting minutes showed growing agreement among policy makers that the inflation target of 2% is not likely to be reached before the end of the current fiscal year. Also, economic growth is expected to slowdown in fiscal 2014.

[R]4:30 PM Tokyo – The latest Bank of Japan policy committee meeting minutes showed growing agreement among policy makers that the inflation target of 2% is not likely to be reached before the end of the current fiscal year. Also, economic growth is expected to slowdown in fiscal 2014.[/R]

Stocks in Tokyo edged lower and then yen rebounded after falling for one week.

The yen has declined 13% in the year so far and latest Bank of Japan minutes of meeting left many investors wondering if the central bank will be able to meet its inflation target.

The latest minutes of meeting of Bank of Japan policy committee showed international economic backdrop is improving but the progress remains halted and uneven.

On the domestic front, the central bank noted that economic growth in the second-half is expected to pick up but growth rate in fiscal 2014 is expected fall considerably.

The policy statement showed concerns about the economic growth in the next fiscal year.

“In addition, as a front-loaded increase in demand prior to the consumption tax hike would take place for private consumption and housing investment, they agreed that the economic growth rate for the second half of fiscal 2013 would be significantly elevated.

Members shared the view that the growth rate for fiscal 2014 would slow substantially compared with the previous fiscal year, as there would be a decline in demand from the front-loaded increase in demand prior to the consumption tax hike, mainly in the first half.”

The committee members also suggested that the central bank’s inflation target is likely to be met towards the end of the current fiscal year and for the inflation to pick up, wages have to increase first and also drive private consumption.

The Nikkei 225 Stock Average slipped 103.89 or 0.7% to 15,515.24 and the Topix fell 6.59 to 1,253.02.

The yen rebounded to 101.52 against one dollar in a relief rally after falling for one week.

Stocks in Review

Toyota Motor Corp dropped 80 yen to 6,350 yen. Honda Motor Co. declined 85 yen to 4,280 yen. Nissan Motor Co Ltd slid 3 yen to 927 yen.

Sony fell 33 yen to 1,848 yen.

Softbank Corp slipped 40 yen to 8,550 yen. Fast Retailing Co. closed unchanged at 36,700 yen.

Fujifilm Holdings Corporation climbed 4.3% to 2,803 yen after the imaging devices maker starts to conduct clinical development of its three anti-cancer agents with The University of Texas of the U.S. is set to start next spring.

Fujitsu Limited dropped 2.7% to 468 yen after the communication technology said its new Docomo Tablet ARROWS Tab F-02F will be available in Japan beginning on this Friday, from NTT Docomo, Inc.

NTT Data Corporation declined 3.8% to 3,665 yen after the Japan-based information technology will offer a one-day flat-rate data communications billing plan for customers traveling overseas beginning December 2. The service """"Global 1 day Pake"""" will vary in cost from 980 yen to 1,280 yen to 1,580 yen depending up on the country or region of use.

Takashimaya Company, Limited plummeted 3.6% to 961 yen after the Japan-based department store operator plans to issue euro-yen denominated convertible bonds of 65 billion yen that matured in 2018 and 2020, the proceeds for acquisition of properties.