BOJ policy tweak eyes sustainable easing

Jiji Press

17:34 JST, December 28, 2022

TOKYO (Jiji Press) — A Bank of Japan policymaker, at last week’s monetary policy meeting where the central bank decided to tweak its current easing regime, said that the move would be for making the monetary easing more sustainable, according to a summary of opinions at the meeting released Wednesday.

At the two-day meeting through Dec. 20, the central bank’s Policy Board decided to allow long-term interest rates to rise to around 0.5%, higher than the previous cap of around 0.25%, while maintaining the bank’s current yield curve control framework.

A member of the board said that the policy move is designed to make the current monetary easing “more sustainable amid global inflation,” while noting that it is not designed to change the direction of the easing, according to the summary.

Another member said that the latest decision is “not a policy change toward an exit from monetary easing.”

Some members cited a need to expand the range of fluctuations for 10-year Japanese government bond yields from the target level of around zero percent in order to improve the function of the bond market, where there is a distortion in the price formation of 10-year JGBs, the summary showed.

Many members said that it is desirable to maintain the current monetary easing framework.

Still, one member said that it is necessary to examining the policy “at some point” in the future to “assess the balance between positive effects and side effects.”