TOKYO: Bank of Japan (BoJ) policymakers see the need to maintain ultra-easy policy as inflation is rising only modestly and wage growth remains feeble, a summary of opinions from their October meeting showed yesterday.

       The nine-member board also sounded sanguine about recent yen declines, with one member saying it reflected the differentials in the inflation and monetary policy stances between Japan and other countries.Supply constraints and rising global commodity costs have pushed up inflation across the globe, prodding some central banks to raise interest rates or ponder withdrawing stimulus.

       While rising energy and food costs are pushing up prices in Japan, inflation remains well below the BoJ’s 2% target as weak consumption discourages firms from passing on higher costs to households.

       “Monetary policy will be normalised in Japan when the price target is achieved in a stable manner irrespective of policy developments in other economies,” one member was quoted as saying in the summary.

       “Given the target has not been achieved, there is absolutely no reason to adjust monetary easing.”

       Some BoJ members did point to signs inflationary pressures are building up in Japan as the economy benefits from the lifting of state of emergency curbs on Sept 30, the summary showed.

       The BoJ board also discussed recent yen declines, with one member saying the impact could vary depending on company size and sector, the summary showed.

       At the Oct 27-28 meeting, the BoJ kept policy steady and retained its view the economy was headed for a moderate recovery as the impact of the Covid-19 pandemic begins to subside.

       The central bank is expected to decide as early as its next meeting in December whether to extend a March 2022 deadline for its pandemic-relief funding programmes.

       Several members pointed to improvements in corporate funding and the distortion the BoJ’s corporate bond purchases could be causing in markets, the summary showed, a sign some in the BoJ may have become more open to ending some programmes.

       “The impact of Covid-19 on corporate financial positions is becoming limited to those in industries facing subdued sales as well as small and medium-sized firms,” one member said.

       “The BoJ will continue to examine relevant data, such as the tankan survey for December, to see whether improvement in corporate financing will become widely observed.”

       Meanwhile, Japan is considering an economic stimulus package worth more than 30 trillion yen (US$265bil or RM1.1 trillion) aimed at easing the pain from the Covid-19 pandemic, a plan that would require issuing new debt, Kyodo news reported.

       Part of the spending will come from funds carried over from last year’s budget, Kyodo reported late on Sunday.

       A government panel tasked with drawing up a blueprint for Prime Minister Fumio Kishida’s so-called new style of capitalism is expected to issue proposals yesterday that will lay the backbone of the planned stimulus package.

       Kishida has promised to compile a large-scale stimulus package this month, and the government is aiming for it to be passed by parliament by the end of this year. Kishida has, however, stopped short of specifying the exact size of the spending and the amount of additional debt.

       The Yomiuri newspaper reported last week spending of roughly two trillion yen (RM73bil) on cash payments to households with children – or 100,000 yen (RM3,656) per child – as part of the stimulus plan.The government was seeking to include other measures in the stimulus package aimed at supporting consumption, which has taken a heavy hit from the coronavirus pandemic.

       Some economists are now hoping a recovery in service-sector spending after the pandemic will support the world’s third-largest economy in the coming months, as a persistent global supply shortage pressures output and exports.

       Among items expected to be included in the package were a restart of a domestic tourism promotion campaign and steps to realise a 10 trillion yen (RM365.6bil) fund for university research, the Sankei newspaper reported on Friday.

       To pay for the package, the government was likely to use about 4.5 trillion yen (RM164bil) left over from the settling of accounts of fiscal 2020 and more than 10 trillion yen (RM365bil) in other unspent funds carried over from that fiscal year, and would consider issuing new debt to cover any further shortfalls, Sankei said.

       The government plans to roll out the extra budget for this fiscal year together with the ordinary budget for next fiscal year starting in April 2022 as a combined 15-month budget as it seeks to fund its efforts seamlessly, the newspaper said. — Reuters