Bank of Japan Recommends a More Transparent Policy Framework

June 19, 2015

The June BOJ Policy Board meeting produced no significant modifications from the previous statement.  Quantitative stimulus was last tweaked in October 2014.  The new statement after five hours 21 minutes of discussion over two days was a virtual replica of May’s and therefore dull.  The baseline forecast assumes a return to 2% core inflation in a secured way by the first half of next fiscal year (sometime between April and September 2016).  Contrary to press reports, nothing was indicated to suggest mounting disagreement among Board members over their policy strategy.

The newsworthy element of the June meeting is a set of recommendations to enhance the transparency of central bank policy.

  • Reduce the number of annual Board meetings to eight, same as several other central banks like the Fed, from 14.
  • Introduce a new compilation of individual opinions to be released a week after each meeting.
  • Retain the minutes that are currently being published as well.
  • A full review of the outlook for growth and prices is presently done in April and October.  Instead of semi-annually, the Board proposes doing this exercise four times per year, adding January and July to the schedule.
  • Introduce dot-plot diagrams as the FOMC uses to show individual growth and inflation forecasts of the Board members.

These changes would have to be approved by the government.  The hope is to adopt them by next January.

Finally, Governor Kuroda press conference again distanced himself from remarks made a week ago that seemed at the time to be a complaint about the yen getting too week.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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