Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
Reporting on key macro data at the time of release.
- Emerging MarketsEmerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
Real-time insight of oil & gas markets
- MNI ResearchMNI Research
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
- About Us
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.Free Access
--Adds Details From 15th Paragraph
TOKYO (MNI) - At their Oct. 30-31 meeting, many Bank of Japan board members
saw no need to reinforce already large-scale monetary easing, arguing that
resulting side-effects of additional accommodation would exceed the benefit, the
summary of opinions at the meeting released Thursday showed.
"In terms of an impact on the markets and financial institutions, as well
as of the sustainability of the policy, additional easing measures would likely
bring about side effects that outweigh positive effects," one member said.
Another member said that the momentum toward achieving the BOJ's 2%
inflation target has been maintained, and "thus is it important to adopt a
wait-and see stance for the time being until the price effects materialize under
the current framework."
The same person also said, "If the BOJ takes an extreme measure only for
the purpose of hastening the achievement of the price stability target, side
effects such as an accumulation of financial imbalances and an impaired
functioning of financial intermediation could arise."
On the other hand, there was an opinion calling for expanding the scope of
bond yield curve control.
One member, believed to be Goushi Kataoka, said, "With a view to lowering
the interest rates with longer maturities, the BOJ should set 15-year JGB yields
as the operating target for the long-term interest rate instead of 10-year JGB
yields, and purchase JGBs so that 15-year JGB yields remain at less than 0.2%."
That person also said, "Through this additional easing measure, the BOJ
would ensure the path toward improving the GDP gap, increasing inflation
expectations, and enhancing spillover effects to the CPI, thereby raising the
probability of achieving the price stability target early."
However, many board members judged that the BOJ should maintain the current
easing stance as the momentum toward achieving the price target is being
At its October meeting, the BOJ board decided in an 8-to-1 vote to maintain
its current monetary easing stance under the yield curve control framework it
adopted in September last year.
Recent weak price data prompted the board to lower its projections for
consumer prices in fiscal 2017 and 2018, but the BOJ stuck to its latest
timeframe that it can achieve its 2% inflation target "around fiscal 2019"
ending in March 2020.
Under the yield curve control framework, the BOJ is seeking to stabilize
the 10-year government bond yield, the benchmark for long-term borrowing costs,
at around zero percent and keep the overnight interest rate at -0.1%.
Board member Kataoka, who joined the board in July, dissented for the
second straight meeting, although he didn't propose any specific policy action.
Instead, Kataoka's comments were included in footnotes in the bank's policy
statement issued after the board's two-day meeting.
"With a view to reinforcing the inflation-overshooting commitment, Mr. G.
Kataoka dissented from the decision, considering that, if there was a delay in
the timing of achieving the price stability target due to domestic factors, the
bank should take additional easing measures and that it was necessary to include
that in the text," the BOJ said.
Kataoka also said that in order to lower longer-term interest rates, it was
appropriate for the BOJ to buy Japanese government bonds so that the 15-year JGB
yield would remain below 0.2%.
One member who believed that the momentum toward achieving the 2% price
target was being maintained said, "Should the BOJ change its policy, it needs to
ensure it achieves price stability target earlier and improves sustainability."
The person added, "It is appropriate to maintain the current policy unless
the BOJ feels confident in the effects of a policy change."
Another member said, "The policy effects and the possible side effects of
the purchases of risky assets including exchange-traded funds (ETFs) should be
examined from every angle."
The October meeting also saw some cautious views on the inflation outlook.
One member said Japan's inflation is expected to rise toward 2% as the
output gap has been positive, but that "it seems to be taking some time to reach
2% as inflation expectations formation is adaptive."
Another member also warned, "It warrants attention that upward pressure on
energy-related prices is likely to dissipate gradually, and downward pressure on
telecommunication-related prices may be prolonged."
The same person added, "Nonetheless, the momentum toward achieving the
price stability target of 2% is being maintained."
Wage and price hikes have been slow respond to the current modest but
sustained economic recovery.
The latest government data showed that the national average core CPI
(excluding fresh food) rose 0.7% on year in September, marking the ninth
straight year-on-year rise, but it is still far from the BOJ's 2% target.
The core-core CPI excluding fresh food and energy rose just 0.2% on year in
September, showing energy is a dominant factor supporting consumer prices.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: firstname.lastname@example.org
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: email@example.com
--MNI BEIJING Bureau; +1 202-371-2121; email: firstname.lastname@example.org
Sign up now for free access to this content.
Please enter your details below and select your areas of interest.
Why Subscribe to
MNI is the leading providerof news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.
Our credibilityfor delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.