Bank of Japan Debating Future For Yields
According to summary of opinions from the last rate review, when discussing how to reinforce the monetary stimulus, BoJ board members appeared to have some disagreements about how distant can interest rates be from the established target. Members also seemed to be worried about growing demerits of prolonged easing and growth reflation with aggressive monetary stimulus.
As we may recall, the Bank promised to maintain its long-term interest rates around 0%. Governor Haruhiko Kuroda said BoJ would allow long-term yields to move at double the prior diapason at around -0.1% to 0.1%. One board member even claimed they would be allowed to move upward and downward by around 0.25%.
Another board member noted: "Controlling long-term yields in a flexible manner is likely to contribute to maintaining and improving market functions. Even if interest rates rise somewhat from the current level, its effects on economic activity and prices are likely to be limited". Some members, however, insist on focusing on risks from a long period of easing.