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MNI POLICY: BOJ Minutes: No Need to Change Guidance

MNI (Sydney)
TOKYO (MNI)

A majority of Bank of Japan board members agreed there is no need to change the BOJ's current commitments, such as achieving a 2% inflation target and forward guidance on the policy rate, according to minutes from the December 17-18 meeting released on Tuesday.

The BOJ board kept monetary policy unchanged at the meeting but announced it would assess further effective and sustainable easy policy measures and release the results of the assessment at the March 18-19 meeting.

The minutes also said: "A few members commented that it was necessary for the Bank to enhance its sustainability through the flexible conduct and be prepared, so that it could respond effectively to possible changes in economic activity and prices as well as financial conditions."

Another member said: "It was necessary to take into account the possibility that, along with the increase in issuance of JGBs, supply-demand conditions would be eased in the bond market; meanwhile, with a view to simultaneously achieving prolonged monetary easing and financial system stability, it was desirable, in a sense, for the yield curve to become steeper at a moderate pace."

This member continued that, in this situation, "it would become necessary to control the yield curve more carefully and finely."

"A few members expressed the recognition that there was considerable room for enhancing productivity of Japanese firms, mainly small and medium-sized ones, and it was vital for them to improve corporate management through such means as digitalization," the minutes said.

These members added that "this was also important with a view to strengthening the growth potential of Japan's economy."

"In addition, one member said that, in order to encourage firms' efforts toward creating value-added, it was important to develop and enhance direct financing through, for example, creating a deep corporate bond market so that more investment funds for growth would be provided to firms, and that the Bank should encourage their activities toward sustainable growth," the minutes said.

MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
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MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
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