2017.09.2521:31:00UTC+00BoJ Minutes: Moderate Expansion Continues For Japan Economy

Members of the Bank of Japan's Monetary Policy Board said that Japan continues to experience a moderate economic expansion, minutes from the bank's July 19-20 meeting revealed on Tuesday.

Overseas economies also are growing steadily, the minutes added, which has led to a bump in Japanese exports.

"Exports had been on an increasing trend on the back of a pick-up in emerging economies. Those to advanced economies continued on their increasing trend; those to emerging economies had picked up, led mainly by electronic parts and capital goods to Asia. Exports would likely continue their increasing trend for the time being," the minutes said.

At the meeting, the bank voted to retain the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank. It also left its massive monetary stimulus unchanged and pushed back the timeframe to achieve its 2 percent inflation target.

The board also voted to retain the central bank's target of raising the amount of outstanding Japan government bond holdings at an annual pace of about JPY 80 trillion.

The central bank will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent.

"Members confirmed that, under the current policy framework, as a result of the Bank's JGB purchases conducted so as to achieve the target level of the long-term interest rate specified by the guideline for market operations, the actual amount of such purchases varied to some extent depending on financial market conditions," the minutes said.

The bank said risks to both economic activity and prices are skewed to the downside.

The growth outlook for the fiscal 2017 was upgraded to 1.8 percent from 1.6 percent and that for the fiscal 2018 was upgraded to 1.4 percent from 1.3 percent. The bank maintained the fiscal 2019 projection at 0.7 percent.

As price growth has remained relatively weak, the inflation projection for the fiscal 2017 was lowered to 1.1 percent from 1.4 percent and the outlook for the fiscal 2018 to 1.5 percent from 1.7 percent.

In the fiscal 2019, inflation is forecast to be 2.3 percent instead 2.4 percent.

The timing for annual inflation to reach around 2 percent will likely be around fiscal 2019, the bank said.

"Most members shared the recognition that, although it was necessary to carefully examine the fact that firms' wage- and price-setting stance remained cautious, the momentum toward achieving the 2 percent price stability target was being maintained," the minutes said.

Also on Tuesday, the central bank said that producer prices in Japan were up 0.8 percent on year in August - topping forecasts for 0.6 percent, which would have been unchanged from the July reading.

On a monthly basis, producer prices fell 0.2 percent after rising 0.3 percent in the previous month.

Individually, prices were higher for advertising, hotels and leasing, while they were lower for information and communications, and software development.