The Bank of Japan's governing council recently released the minutes of its latest meeting, where they discussed several aspects related to its current monetary policy.
They determined that that Bank should prepare for the next economic recession, as well as pursuing a joint action with the government.
“The BOJ should prepare for the next economic downturn as among risk scenarios. In doing so, it’s important not only to take monetary policy action but enhance cooperation with the government,” stated the bank on its minutes.
Japan currently holds its cash rates at a very low level, at -0.1 percent, a move that poses a problem for the bank as it pushes inflation downwards, leaving it behind the bank's 2 percent target (at a year-to-year 0.5 percent), obligating it to implement stimulus measures. Besides what we've already mentioned, this ultra-low cash rates environment affects the profits of Japanese financial institutions.
“While financial institutions’ soundness was ensured for the moment, the cumulative side effects of prolonged low-interest rates warranted vigilance,” it explained.
As per the Japanese economy, the bank governing council insisted it’s on an expanding trend despite exports and business sentiment are being affected by the sluggish overseas economic growth.
"Japan's economy had been on a moderate expanding trend, with a virtuous cycle from income to spending operating, although exports, production, and business sentiment continued to be affected by the slowdown in overseas economies," it said.
The bank also expects public investment to expand, mainly for construction and the upcoming summer Olympic games.
By 10:24 GMT the US dollar remained almost steady against the Japanese Yen, at 109.40. The Euro fell by 0.07 percent against it, at 121.17 while the Canadian dollar went down by 0.12 percent against it, hitting the 83.10 level.