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TOKYO (MNI) - At their Oct. 3-31 meeting, many Bank of Japan board members
saw no need to reinforce already large-scale monetary easing, arguing that
resulting side-effects of additional accommodation would exceed the benefit, the
summary of opinions at the meeting released Thursday showed.
"In terms of an impact on the markets and financial institutions, as well
as of the sustainability of the policy, additional easing measures would likely
bring about side effects that outweigh positive effects," one member said.
Another member said that the momentum toward achieving the BOJ's 2%
inflation target has been maintained, and "thus is it important to adopt a
wait-and see stance for the time being until the price effects materialize under
the current framework."
The same person also said, "If the BOJ takes an extreme measure only for
the purpose of hastening the achievement of the price stability target, side
effects such as an accumulation of financial imbalances and an impaired
functioning of financial intermediation could arise."
On the other hand, there was an opinion calling for expanding the scope of
bond yield curve control.
One member, believed to be Goushi Kataoka, said, "With a view to lowering
the interest rates with longer maturities, the BOJ should set 15-year JGB yields
as the operating target for the long-term interest rate instead of 10-year JGB
yields, and purchase JGBs so that 15-year JGB yields remain at less than 0.2%."
That person also said, "Through this additional easing measure, the BOJ
would ensure the path toward improving the GDP gap, increasing inflation
expectations, and enhancing spillover effects to the CPI, thereby raising the
probability of achieving the price stability target early."
However, many board members judged that the BOJ should maintain the current
easing stance as the momentum toward achieving the price target is being
At its October meeting, the BOJ board decided in an 8-to-1 vote to maintain
its current monetary easing stance under the yield curve control framework it
adopted in September last year.
Recent weak price data prompted the board to lower its projections for
consumer prices in fiscal 2017 and 2018, but the BOJ stuck to its latest
timeframe that it can achieve its 2% inflation target "around fiscal 2019"
ending in March 2020.
Under the yield curve control framework, the BOJ is seeking to stabilize
the 10-year government bond yield, the benchmark for long-term borrowing costs,
at around zero percent and keep the overnight interest rate at -0.1%.
Board member Kataoka, who joined the board in July, dissented for the
second straight meeting, although he didn't propose any specific policy action.
Instead, Kataoka's comments were included in footnotes in the bank's policy
statement issued after the board's two-day meeting.
"With a view to reinforcing the inflation-overshooting commitment, Mr. G.
Kataoka dissented from the decision, considering that, if there was a delay in
the timing of achieving the price stability target due to domestic factors, the
bank should take additional easing measures and that it was necessary to include
that in the text," the BOJ said.
Kataoka also said that in order to lower longer-term interest rates, it was
appropriate for the BOJ to buy Japanese government bonds so that the 15-year JGB
yield would remain below 0.2%.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: email@example.com
--MNI BEIJING Bureau; +1 202-371-2121; email: firstname.lastname@example.org
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