MNI BRIEF: BOJ Jan Minutes Show Criticism Of YCC Tweak

Some Bank of Japan board members voiced criticisms of December’s decision to widen the range around the 10-year bond yield target despite the change receiving an unanimous vote, minutes of the January 17-18 meeting released on Wednesday showed.

The minutes didn’t identify the members but the members were likely reflationist members, such as Deputy Governor Masazumi Wakatabe and board member Asahi Noguchi.

“Some members said that the Bank's intention to decide on modifying the conduct of yield curve control at the previous meeting might not yet have been fully conveyed considering that some market participants had pointed out that such modification was inconsistent with the Bank's communication to date and that it was effectively a policy interest rate hike,” the minutes showed.

“One member noted that some market participants were expecting that further modification of the conduct of yield curve control would take place; however, if the Bank modified its conduct again soon after the previous modification, this could in turn make the future conduct of monetary policy unclear.”

“One member added that the BOJ should carefully explain that it needed to continue with monetary easing, that its accommodative monetary policy stance had not been changed, and that it would take time to achieve the price stability target of 2% in a sustainable and stable manner because wage increases had not yet become full-fledged,” the minutes showed.

The minutes revealed some members noted “it was important for the BOJ to analyze and assess not only developments in price indices but also the mechanism behind the underlying trend in prices and its sustainability, and to clearly explain this to the public.”