BOJ discusses tweaking yield curve control, January meeting minutes say

The Japanese flag flies over the Bank of Japan (BoJ) headquarters building (bottom) on April 27, 2022.

Kazuhiro Nogi | AFP | Getty Images

Minutes of the January meeting released on Wednesday showed BOJ policymakers debated the feasibility of further tweaking their bond yield curve control, with one member saying “various options must be kept in mind” in the course of monetary policy going forward. “.

The nine-member committee concluded that it was too early to unwind ultra-loose monetary policy because inflation has yet to sustainably meet the Bank of Japan’s 2 percent target, according to the minutes of its Jan. 17-18 meeting.

But many board members said the distortion in the yield curve had not been resolved, partly because the Bank of Japan has aggressively bought bonds to defend its yield ceiling, the minutes showed, underscoring their concern about the rising cost of prolonged monetary easing.

“At some point in the future, the BOJ will have to review its policy to determine its balance of benefits and costs. For now, however, it is appropriate to maintain monetary accommodation,” a member said.

“The BOJ must keep various options in mind when directing monetary policy. But with overseas economies now slowing, it would be inappropriate to rush out” of ultra-loose policy, another committee member said, according to the minutes.

At its January meeting, the BOJ kept interest rates ultra-low, including a cap on bond yields it has fought hard to defend, defying market expectations that the central bank will wind down its massive stimulus program amid rising inflationary pressures. expected.

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