Policymakers were sharply divided over expanding the Bank of Japan’s huge easing plan last month, with opponents of the move warning that the risks far outweighed any benefits, minutes from the meeting showed Tuesday.
The BoJ surprised markets last month by saying it would inflate its asset-buying plan by up to 80 trillion yen ($676 billion) annually, but the move was narrowly passed a 5-4 vote among board members. AFP reported.
The decision, which came days after the US Federal Reserve wound down its own stimulus, has sent the yen plunging to multi-year lows against the dollar and euro while pushing equities to highs not seen since before the global financial crisis.
However, critics on the policy board questioned “the sustainability of its effects” and warned that the impact of fresh measures on the world’s number three economy, and the BoJ’s drive to hit a 2.0 percent inflation target, “would not be large”. They also said it could “considerably” squeeze liquidity in Japanese government bond markets.
One member warned that the weakness of the yen would batter small domestic firms, which would face soaring import costs.
The four opposing members were Koji Ishida and Yoshihisa Morimoto, both former business executives seen as loyal to BoJ chief Haruhiko Kuroda, along with former private sector economists Takehiro Sato and Takahide Kiuchi.
The close call suggested that Kuroda – who was hand- picked by Prime Minister Shinzo Abe as part of a wider plan to kickstart the economy – almost became the first BoJ chief to lose a vote on a policy that he proposed, according to Dow Jones Newswires.
However, one member who supported the move said: “These measures were expected to produce stronger effects on corporate profits, employment, and wages than in the past.”
