Haruhiko Kuroda, governor of the Bank of Japan, delivers the keynote address at the Institute Of International Finance Annual Membership Meeting in Washington, DC

Tensions over the Bank of Japan’s radical stimulus programme spilled into the open once more on Thursday, as three of the nine board members reiterated objections to the bank’s growth and price forecasts.

In April the BoJ embarked on what it called a “new phase” of monetary easing, seeking to double the country’s monetary base to hit a 2 per cent target for inflation within about two years.

Later that month, as the BoJ presented its semi-annual report on the outlook for the economy and inflation, three members refused to endorse certain phrases, minutes of a board meeting later showed.

On Thursday, as the BoJ presented its latest six-monthly report, governor Haruhiko Kuroda said that the same three members – Takahide Kiuchi, Takehiro Sato and Sayuri Shirai – had dissented. Ms Shirai wanted to put more emphasis on the downside risks mentioned in the report, while Mr Kiuchi and Mr Sato expressed doubts over the BoJ’s ability to hit its 2 per cent target by the latter half of the 2015 fiscal year. Their proposals were all defeated, the governor said.

This latest rebellion over terminology is less serious than a fallout over actual monetary policy decisions, which have been approved unanimously since April. On Thursday the board voted once more to keep pumping up the monetary base at an annual pace of about Y60tn-Y70tn ($610bn-$712bn).

However, the disclosure suggests enduring disagreements over the pace and scale of the easing required to lift Japan out of the state of deflation that has persisted for much of the past 15 years. Debate among board members may intensify over the next six months, said analysts, as the pass-through effect of a weaker yen begins to fade – dragging on inflation – and as the consumption-tax hike scheduled for April dampens growth.

Ms Shirai, always seen as one of the more dovish BoJ board members, may be ready to push for extra stimulus, said Masaaki Kanno, chief economist at JPMorgan. But such efforts could be resisted by Mr Sato and Mr Kiuchi, both former private-sector economists, who seem to think that “trying to achieve 2 per cent inflation is too costly,” he said.

The central bank’s forecasts remain much more optimistic than the consensus outside. While BoJ board members, as a whole, expect growth and inflation of 1.5 per cent and 1.3 per cent (excluding the tax rise) in the next fiscal year beginning in April, for example, private economists expect an average of 0.7 per cent and 0.8 per cent respectively, according to the Japan Centre for Economic Research.

Analysts note that under Mr Kuroda, the BoJ’s forecasts have become a more important tool to influence broader expectations of inflation.

Even so, Mr Sato and Mr Kiuchi “appear worried about damage to the BoJ’s credibility, if forecasts are widely off the mark,” said Hiroshi Shirashi, economist at BNP Paribas in Tokyo.

Mr Kuroda is counting on radically increased purchases of government bonds to push asset prices higher, keep borrowing costs low and to lure bond-heavy investors into riskier stocks and loans.

The BoJ has met with some success. Japan’s benchmark 10-year interest rate has steadily sunk since June to less than 0.6 per cent, easily the lowest in the world, while there are signs of an increase in companies’ appetite to borrow. Year-on-year growth in the outstanding stock of loans has been above 2 per cent since April, the highest level since the post-Lehman period.

Inflation, meanwhile, climbed to a five-year high of 0.8 per cent in August before slipping back to 0.7 per cent in September, pushed up mostly by higher bills for imported fuel as a result of a weaker yen.

Yet the most obvious beneficiaries have been stock and property markets, which have recorded extraordinary gains since Mr Abe became prime minister last December.

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