"The quantitative monetary easing policy, then tied to the balance of commercial financial institutions' current account deposits at the central bank, has been somewhat insufficient in its effects on the real economy"
- Ex-Gov. Toshihiko Fukui
The Bank of Japan's transcripts of previous policy meetings, which were disclosed this week, unveiled that a strong sense of crisis was stressed out the BoJ's chief during the extraordinary meeting in March 2003. Governor Toshihiko Fukui opposed the introduction of an inflation target, by expressing concerns that monetary policy could impact prices by influencing public sentiment. In response to Deputy Governor Kazumasa Iwata, who called for an inflation target, Fukui pointed out that monetary authorities do not have power to control the market and consumer expectations. During spring 2003 Japanese stocks were constantly plunging amid growing concerns about the bad loan-saddled domestic banking system.
This decision contrasts with the one made by current BoJ's Governor Haruhiko Kuroda and Shinzo Abe's Abenomics, who both support using an inflation target in seeking to beat decades of negative price growth in the world's third largest economy. Even despite the upcoming tax hikes, the BoJ now expects real gross domestic product to grow 1.3% in the fiscal year starting in April. Moreover, in case Abe will decide to change the implementation of the tax rise to 1% a year, the economy could possibly accelerate even further, outpacing analysts' expectations.
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