BoJ members hose down speculation of bond yield hike
TOKYO: Bank of Japan (BoJ) board member Yukitoshi Funo has joined other policymakers in hosing down speculation of a near-term withdrawal of the central bank’s massive monetary stimulus, saying it was premature to consider raising the BoJ’s bond yield target.
While offering an optimistic view on Japan’s economic prospects, the former Toyota executive said it was uncertain whether companies would raise wages to help accelerate inflation to the BoJ’s 2% inflation target.
“Inflation is still low compared with our target. We’re not in a condition to consider shifting monetary policy, such as by adjusting our yield target,” Funo told reporters after meeting business leaders in Shizuoka, eastern Japan.
Funo’s comments follow the central bank’s minutes for its January meeting released yesterday, which showed some of the board’s nine members rejected suggestions the BoJ should raise its 10-year government bond yield target to match expected gains in Treasury yields.
These members said the BoJ should focus solely on meeting its 2% inflation target, a difficult task due to worries about overseas economies and inflation expectations.
“Although some market participants speculated that the bank might consider raising the target level of the long-term interest rate in response to such factors as a rise in the US long-term interest rates, its monetary policy decisions should be made solely based on the viewpoint of aiming to achieve the 2% price stability target,” some members said.
The BoJ does not identify board members in the minutes of its policy meetings.
At the Jan 30-31 policy meeting, the BoJ raised its growth projections but warned that prospects for hitting its 2% inflation target remained uncertain.
The BoJ also maintained its pledge to guide short-term interest rates at minus 0.1% and the 10-year government bond yield around 0%. Funo has voted with the majority of the board including a decision in September to shift the BoJ’s policy framework to one targeting interest rates from the pace of money printing.
BoJ governor Haruhiko Kuroda has said earlier this month that an uptick in inflation toward 1% won’t immediately prompt an interest rate hike. – Reuters