Bank of Japan board members said the central bank has been pursuing “powerful monetary easing” and a few said Europe’s sovereign-debt crisis could hurt Japan’s economy, a record of last month’s gathering showed.
Board members agreed that it was appropriate to monitor the effects of the BOJ’s asset purchases, which were expanded at the the previous meeting in April, according to the minutes of the May 22-23 meeting released in Tokyo today. One member warned that the risk of automatically adding stimulus could affect the stability of the economy and prices.
The meeting was held prior to the second Greek election and a few members expressed concern that Japan’s economy could be “adversely affected” by the materialization of “substantial risk” stemming from the European crisis. These members said “the bank should stand ready to take appropriate actions without ruling out any option in advance.”
Since the election, Europe’s woes have shown no signs of abating, with Spanish 10-year bond yields rising above 7 percent this week.
Some members said that attention needed to be paid to the risk of an abrupt jump in long-term interest rates, and members shared the view that it is “extremely important that the credibility of fiscal sustainability in financial markets be maintained,” the minutes showed.
One member expressed concern over the impact of the recent appreciation of the yen and a fall in stock prices and was worried about the effect of this on capital investment, according to the release.