Investing.com - Several Bank of Japan board members agreed that a stronger commitment to hitting a sustained 2% inflation target was needed, including overshooting the aim, as expectations were sliding due to the public's backward-looking views on prices, minutes of the Sept. 20-21 policy meeting released Monday showed.
The board shared the view that, in order to achieve the price stability target of 2%, it was necessary to raise inflation expectations, which had weakened, toward 2%, the minutes said.
"Most members expressed the recognition that measures to strengthen the forward-looking expectation formation mechanism were warranted, as the adaptive component continued to play a relatively large role compared to other countries in terms of the formation of inflation expectations in Japan," they said.
Many members shared the view that, in light of such measures, it was appropriate for the BoJ "to strengthen its commitment to achieving the price stability target."
A few members said it was appropriate for the BoJ to adopt the "inflation-overshooting commitment," in which it committed itself to expanding the monetary base until the year-on-year rate of increase in the observed CPI exceeded the price stability target of 2% and stayed above the target in a stable manner.
However, one member said, "Inflation-overshooting commitment was not a realistic target in light of the growth potential, and would not be effective for raising inflation expectations either."
For now, the BoJ has kept the increase in the monetary base at an annual rate of ¥80 trillion.
In the September meeting, in a 7-to-2 vote, the board maintained the negative interest rate at -0.1%, which is charged on a small portion of reserves lenders park with the central bank. The policy took effect in February with the aim of encouraging banks to lend to and invest in more growth areas.