MNI BRIEF: Board Member Notes YCC Review At Early Stage

A Bank of Japan board member noted the need to review yield curve control due to its high costs, although the member saw that the cost of waiting to achieve the 2% price target was not high at the June 15-16 meeting, the summary of opinions released Monday showed.

“Although there is a growing possibility of achieving 2% inflation in a sustainable and stable manner, the Bank should maintain the overall framework of monetary easing for the time being, since the cost of waiting for such achievement is not high,” the member commented. “That said, as for yield curve control... the cost is high, taking into account such factors as [1] preventing sharp fluctuations in interest rates in the future phase of an exit from the current monetary policy, [2] improvement in market functioning, and [3] enabling smoother dialogue with market participants. Given all of this, a revision to the treatment of yield curve control should be discussed at an early stage.”

A separate member said many small- and medium-sized firms have started to be more willing to raise wages and invest with, for example, their continued pass-through of cost increases and export expansions. "It would be premature to revise monetary policy if it would hinder such developments,” the member noted.