Japan needs to strengthen foundations for economic growth: BOJ

12:22, May 26, 2010      

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The Bank of Japan (BOJ) board members confirmed that Japan needs to strengthen the foundations for economic growth and to this end the central bank need to make new efforts, according to a minutes of the April 30 policy-setting meeting released on Wednesday.

The chairman of the board, Governor Masaaki Shirakawa, told the BOJ staff to examine and report on possible ways to support private financial institutions in terms of fund providing with a view to strengthening the foundations for economic growth, the minutes stated.

The minutes also revealed that many members of the BOJ board believe it is necessary for the central bank to accept some inflation as a safety margin against an ongoing trend in falling prices.

"Many members said that it was necessary to accept some inflation as a safety margin that acts as a buffer against the risk of falling into a vicious circle of declining prices and deteriorating economic activity," the minutes said.

Most of the policy board feel that the Consumer Price Index ( CPI) is an accurate measure of price pressures in the Japanese economy, it showed.

"Many members expressed the view that no large measurement bias remained in the CPI in Japan," according to the minutes.

Regarding the understanding of medium-to-long-term price stability, the minutes said that the figure representing many members' understanding was around one percent, within a range of 0. 5 percent to one percent in either direction.

The BOJ stated on April 30 that its policy board voted unanimously to leave the target for the overnight lending rate among commercial banks unchanged at 0.1 percent, as largely anticipated.



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