BOJ board debated feasibility of tweaking YCC
© Reuters. FILE PHOTO: A man walks in front of the headquarters of Bank of Japan in Tokyo, Japan, January 18, 2023. REUTERS/Issei Kato
By Leika Kihara
TOKYO (Reuters) -Bank of Japan (BOJ) policymakers debated the feasibility of making further tweaks to its bond yield curve control with one member saying it must keep “various options in mind” on the future course of monetary policy, minutes of its January meeting showed on Wednesday.
The nine-member board concluded that it was premature to exit ultra-loose monetary policy now with inflation yet to sustainably achieve the BOJ’s 2% target, according to the minutes of the Jan. 17-18 meeting.
But many board members said distortions in the yield curve, caused in part by the BOJ’s aggressive bond buying to defend its yield cap, have yet to be fixed, the minutes showed, underlining their concern over the rising cost of prolonged monetary easing.
“At some point in the future, the BOJ must conduct an examination of its policy to determine the balance of its benefits and cost. For now, however, it was appropriate to maintain monetary easing,” one member was quoted as saying.
“The BOJ must keep various options in mind in guiding monetary policy. But with overseas economies slowing now, it’s inappropriate to rush towards an exit” from ultra-easy policy, another board member said, according to the minutes.
At the January meeting, the BOJ maintained ultra-low rates, including a bond yield cap it was struggling to defend, defying market expectations it would phase out its massive stimulus programme amid mounting inflationary pressure.