Based on a slowing recovery and its impact on economic activity, policy board members of the Bank of Japan agreed it was necessary to continue monetary easing.
Minutes of Japan's last policy board meeting, held Oct. 4, show members agreed that overseas economies had continued to recover, but the pace of recovery had been slowing. As for the outlook, they shared the view that, although the pace would probably continue to slow for the time being, the recovery trend itself was not likely to be interrupted.
One intriguing exchange occurred when certain members that were not identified asked about government asset purchases to further stimulate Japan’s economy. Among other ideas, they wanted to know if exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) could be subject to purchase if the bank received government authorization pursuant to Article 43 of the Bank of Japan Act.
Some members said that while the amount of purchase might be small, the bank's purchase would produce positive effects as a catalyst in promoting more active transactions in their markets and more risk-taking activity in the overall economy.
However, one member expressed the view that since the number of highly rated J-REITs was relatively limited, the purchasing of J-REITs would involve difficult judgment calls in terms of the bank's direct involvement in the allocation of funds to individual firms and industries, and this warranted attention.