Bank of Japan Governor Shirakawa bows to greet reporters after a news conference at the BOJ headquarters in Tokyo
Bank of Japan Governor Shirakawa bows to greet reporters after a news conference at the BOJ headquarters in Tokyo Reuters

Bank of Japan's board is concerned about the U.S. Federal Reserve's quantitative easing, as Japan continues to bank on the global economic recovery for its own economic growth, minutes from the policy meeting showed.

The Bank, which had stated last week that it expects Japan's economy to continue to be weak for a little while longer and improve moderately from then, said that the effects of the measures taken by the Fed were highly uncertain and that the U.S. economy was still likely to remain low for some time.

Minutes of the meeting held on Nov 4 and 5, which was released on Monday, showed that the growth rate of the global economy was likely to start increasing again led by emerging and commodity-exporting economies, and following the sharp increase seen previously, the effects of a decline in demand for some goods, particularly durable consumer goods, were likely to become less pronounced.

In this regard, one member expressed the view that the growth rate in GDP was likely to be slightly negative in the October-December quarter compared with the previous quarter, but Japan's economy was likely to return to a growth path thereafter, the minutes said.

Japan's economy has been fighting deflation since 1998. Though October saw a slight rise in inflation for the first time in 24 months, most economists believe that this would not be sustainable. Inflation has actually turned positive on several occasions in the past, mainly due to food or energy price increases.

The BoJ has continued to keep interest rates between zero and 0.1 percent as the economic recovery seems to faltering again and the Japanese yen grows weaker against the dollar.

Some members raised the possibility of the appreciation of the yen exerting downward pressure on prices as a risk factor unique to price developments, the minutes showed.

However, others pointed to the possibility that the effects of the rise in international commodity prices might spill over to domestic prices. Most agreed regarding the need to monitor future price developments on a national level, particularly the rise in the consumer price index, which had been attributed to the rise in tobacco tax earlier this year.