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TOKYO (MNI) - The Bank of Japan board decided to stand pat on monetary
policy Thursday, voting 7-2 to leave yield curve control and asset purchases
unchanged, with the board seeing Japan's economy still expanding moderately,
despite downside risks.
The BOJ vowed to maintain its current easy policy "for an extended period
of time," taking into account uncertainties regarding economic activity and
prices, including the effects of the consumption tax hike planned for October
These are the key points from the BOJ board decision, which came after the
latest two-day policy meeting :
--Under the yield curve control framework adopted in September 2016, the
BOJ will keep the target for the overnight interest rate at -0.1%.
-- The BOJ will continue buying JGBs to stabilize the 10-year yield "around
zero percent" but it will also allow the long-term interest rate to "move upward
and downward to some extend" in line with the changes in economic growth and
In July, the bank "strengthened" the framework, allowing a wider trading
range of +0.2% to -0.2% for the 10-year Japanese government bond yield, double
the previous, unofficial range of +0.1% to -0.1%.
--KATAOKA, HARADA DISSENT
--Reflationist board members Yutaka Harada, a former government economist,
and Goushi Kataoka, a former private-sector economist, dissented again.
--Harada called the guideline for market operations "too ambiguous" while
Kataoka continued to call for additional easing. He said, "It was desirable to
strengthen monetary easing so that the yield on JGBs with maturities of 10 years
and longer would broadly be lowered further."
--On forward guidance, Harada also dissented, arguing that it would be
better to adopt one that would "further clarify its relationship" with the
inflation target. Kataoka also opposed. He repeated that it would be better to
promise additional easing in the event of a downward revision to the board's
longer-term inflation outlook.
-On the conduct of monetary policy, the BOJ maintained the view the bank
"intends to maintain the current extremely low levels of short- and long-term
interest rates for an extended period of time, taking into account uncertainties
regarding economic activity and prices including the effects of the consumption
tax hike scheduled to take place in October 2019."
-Officially, the BOJ will maintain the annual pace of its JGB purchases at
around Y80 trillion, although the pace has declined sharply as the accumulated
effects of keeping rates down with asset purchases have intensified. The bank
noted it will conduct the purchases "in a flexible manner."
-The scale of asset purchases, such as exchange-traded funds (ETFs), Japan
real estate investment trusts (J-REIT), commercial paper and corporate bonds was
unchanged at Y6 trillion, Y90 billion, Y2.2 trillion and Y3.2 trillion,
--ECON ASSESSMENT UNCHANGED
-The board maintained its economic assessment, despite growing
uncertainties over global demand caused by the U.S.-China trade dispute.
"Japan's economy is expanding moderately, with a virtuous cycle from income
to spending operating, it said, adding that the economy "is likely to continue
to be a moderate expansion."
"Overseas economies have continued to grow firmly on the whole," the BOJ
repeated the view.
-The bank repeated that exports, industrial production and business
investment are on an uptrend while private consumption has been increasing
moderately, albeit with fluctuations.
-The BOJ continues to see risks to the outlook in the U.S. economic
policies' impact on global financial markets, the consequences of protectionist
moves, developments in emerging and commodity-exporting economies, Brexit
negotiations and geopolitical risks.
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