MNI BRIEF: Most Members Want More Flexibility - BOJ Minutes

Most Bank of Japan board members believe the Bank should allow greater flexibility in the conduct of yield curve control to sustain monetary easing amid high uncertainty for prices, according to the July 27-28 meeting minutes released Wednesday.

“Some members were of the view that, if upward movements in prices continued, allowing to some extent a rise in long-term interest rates would enable the BOJ to maintain the positive effects of monetary easing through the channel of real interest rates, while alleviating, for example, a decline in the functioning of bond markets,” the minutes showed.

One member said keeping long-term interest rates stable at low levels to achieve the 2% price-stability target was important, the minutes showed. The same member noted, until the likelihood of achieving the target rose sufficiently, the BOJ should maintain YCC with greater flexibility.

Several members noted significant downside risks to Japan's economic activity and prices existed, especially with regard to the impact of overseas economies. However, some members stressed the BOJ must clearly explain allowing greater YCC flexibility was not a step toward an exit from monetary easing, "and there was no change in its stance of patiently continuing with such easing,” the minutes showed."