TOKYO (Reuters) - A majority of Bank of Japan board members said slumping oil prices will weigh on inflation in the short-term but will accelerate price rises over the long run by stimulating the economy, minutes of the bank’s policy-setting meeting in December showed.
The minutes suggest the central bank is in no rush to expand its massive stimulus program again and is likely to look through short-term dips in consumer inflation, as long as the economy is on track for a solid recovery.
But some members voiced caution over weak consumer and business sentiment, according to the minutes released on Monday, a sign that a few in the nine-member board did not necessarily share BOJ Governor Haruhiko Kuroda’s optimism over the outlook.
“Many members said consumer sentiment surveys have shown relatively weak developments recently,” while one said there were signs companies may be delaying capital expenditure due to the murky outlook, the minutes showed.
The BOJ has kept monetary policy steady after expanding stimulus in October to prevent falling oil prices, and a subsequent slowdown in inflation, from delaying a sustained exit from deflation.
Many market players expect the central bank to ease again sometime this year as oil prices continued to fall and push consumer inflation below 1 percent, underlining the challenges of achieving its ambitious 2 percent target in the year beginning in April.
In the December meeting, BOJ policymakers voiced concern over how markets were tying their bets on the timing of further easing to oil price moves and their effect on consumer inflation, the minutes showed.
Most members said the BOJ eased in October not directly in response to oil price falls, but to prevent slowing price rises from hurting inflation expectations.
“One member said what was important was the overall trend of prices,” which must be measured not just by market indicators but by changes in corporate and household activity, the minutes showed.
Editing by Paul Tait