Investing.com - Some Bank of Japan board members suggest estimates of the time needed for Japan to hit sustained 2% inflation need to be put further back and that it's best to leave negative rates in place with consumer sentiment down sharply, according to minutes from the April policy meeting released on Monday showed.
However, some members suggested crude oil prices had rebounded since mid-February after pushing Japan's core CPI (excluding fresh food) down to zero from a modest rise.
"Some members expressed the recognition that there was an increasing risk that, from early spring, the year-on-year rate of increase in the CPI (all items less fresh food and energy) would come in lower than previously projected," the minutes said.
As well, a reversal of the the yen's depreciation, which had supported exporter profits, remained a concern on hitting the price target and on consumer expectations for inflation.
"These members said that it was necessary to closely monitor whether such developments in inflation expectations would affect firms' and households' behavior in the future," the minutes showed.
At the April meeting the board decided by a majority vote to continue its massive asset purchases at ¥80 trillion annually and charging 0.1% interest on a small portion of cash parked by lenders.
"A few of these members added that portfolio rebalancing under QQE with a Negative Interest Rate had not necessarily exerted its intended effects, since alternative financial assets in the domestic market in which to invest were limited."
One member said that the BOJ "should not withdraw from the negative interest rate policy immediately following the introduction of the policy, given that it already had been implemented and that people were taking actions based on the fact that the policy was in place."
"A different member said that, although adverse effects had been observed with respect to the policy, it was appropriate to keep it on hold since there was a risk that a withdrawal from the policy soon after its introduction would confuse the markets and impair the credibility of the Bank," the minutes said.