"Most members shared that recognition that, given Japan's economy was on a steady path toward recovery, Japanese financial markets, which had shown volatile movements recently, were likely to gradually regain stability,"
- Bank of Japan Monetary Policy Meeting Minutes
As it was widely expected the Bank of Japan Monetary Policy Meeting Minutes, which make reference to the meeting held on June 11, came with no surprise for the market participants. The decision to stay pat on its monetary policy was prompted by signs that the world's third largest economy is on the path of sustain recovery, while assessing the downside risks included a weaker-than-expected performance of overseas economies. The main headlines during the last meeting were the pledge to increase the monetary base by 60-70 trillion yen annually, the pace of bond purchases will stay at 50 trillion yen per year, while exchange-traded funds and real estate investment trusts will bought at an annual pace of around 1 trillion and 30 billion yen respectively.
Even taking into account the recent pick-up in export level, industrial production and consumer sentiment, BoJ policymakers were at odds over whether to introduce additional steps to calm bond markets last month, warning that doing so would give investors the impression that it is over-reacting to short-term fluctuation. Therefore, the decision to maintain the pace of stimulus programme was done not univocally as the BoJ discussed the idea of extending the maximum duration of cheap and fixed-rate funds, which are offered via market operations from this year.
© Dukascopy Bank SA