By Leika Kihara

TOKYO, Reuters – Bank of Japan policymakers believe it is necessary to keep an ultra-easy policy because inflation has fallen only moderately while wage growth is still slow. This was a summary of their opinions at Monday’s October meeting.

Nine members of the board were also optimistic about recent yen falls. One said that it was due in part to the differences between Japan’s inflation and monetary policy positions.

Inflation has risen across the globe due to supply constraints and higher global commodity prices. This has prompted some central banks around the world to increase interest rates, or withdraw stimulus.

Rising food and energy costs have pushed up Japan’s prices, but inflation is still well below the BOJ’s target of 2%. This is because weak consumption dissuades firms from passing higher costs onto households.

According to the summary, one member stated that Japan will normalize monetary policy if the price target has been met in a steady manner regardless of any policy changes in other economies. The summary states that there’s no reason for adjusting monetary easing since the target hasn’t been met.

Some BOJ members noted signs of inflation in Japan, as Japan’s economy reaps the benefits of the lifting of the Sept. 30 state of emergency restrictions.

BOJ board members also spoke out on recent yen drops. A member said that impact can vary depending upon company size or sector.

The BOJ held a steady policy at its Oct. 27-28 meeting and maintained that it believed the economy was heading for moderate recovery, as the COVID-19 epidemic begins to recede.

It is possible that the central bank will decide at its December meeting whether or not to extend March 2022 as the deadline to fund its pandemic relief programs.

A number of members suggested improvements in corporate finance and potential market disruptions from the BOJ’s corporate bond purchase. The summary revealed that this was a signal that the BOJ might have been more open towards ending some programs.

A member of the panel stated, “The effect COVID-19 has on corporate financial position is beginning to be limited to those who are in subdued industries as well as small- and medium-sized companies.”

“The BOJ continues to review relevant data, including the December tankan survey, in order to assess whether there will be widespread improvement in corporate funding.”