Bank of Japan board members said they need to avoid any "misunderstanding" that central bank asset purchases will automatically increase, the minutes of a meeting last month show.
"Members made note of some misunderstanding that the bank would continue to increase the size of its program in an automatic manner," until the BOJ's 1 percent price goal was met, according to the record of an April 27 meeting released Monday in Tokyo. "They agreed that the bank needed to fully explain that it made decisions on its monetary policy stance after carefully assessing the economic and price situation."
BOJ Gov. Masaaki Shirakawa and his board added ¥10 trillion to the purchase program at the gathering, the second time this year they have bolstered the facility, which is their main policy tool. The yen's 5 percent climb against the dollar since mid-March is weighing on the profits of exporters, an indication there will be continued pressure on the central bank to add stimulus.
"The BOJ is emphasizing they will act according to the price outlook, which will be affected by developments in currencies," said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo. "Whether it wants to or not, the BOJ won't have a choice but to increase asset purchases if the yen strengthens significantly."
BOJ staff at the gathering said increasing holdings of exchange-traded funds, which are bought through the facility, entail "a considerable risk of price volatility," the minutes said.
The board refrained from extra easing at a meeting last week while Shirakawa pledged to continue "powerful monetary easing."
