REPEAT: MNI POLICY: BOJ Ops: One Favored Wider 10-Yr Yld Range

Repeats Story Initially Transmitted at 05:34 GMT Aug 8/01:34 EST Aug 8

     TOKYO (MNI) - One of the nine Bank of Japan board members argued for

allowing the long-term interest rate to move in a range of +0.25% to -0.25%,

slightly wider than the +0.2% to -0.2% range proposed by some other members,

according to the summary of opinions expressed at the BOJ's July 30-31 policy

meeting and released Wednesday.

     Most others agreed to allow the 10-year Japanese government bond yield to

fluctuate in a range of -0.2% to +0.2% while the board decided to maintain the

official target for the 10-year yield "at around zero percent." Two disagreed to

flexible fluctuations, saying that would make the target unclear.

     At the meeting, the BOJ board decided in a 7-to-2 vote to make its

long-term interest rate target and asset purchases more "flexible," allowing the

nearly flat Japanese government bond yield to steepen slightly in line with

firmer growth and inflation.

     The statement didn't refer to the bank's new allowance for the same "around

zero" target for the long-term interest rate but Governor Haruhiko Kuroda told

reporters after the meeting that the BOJ was now allowing a wider trading range

of +0.2% to -0.2% for the 10-year JGB yield, double the previously unpublished

range of +0.1% to -0.1%.

     The key points from the summary of opinions:

     --"It is appropriate to bear in mind that the long-term yields may move

upward and downward at about double the range of around plus or minus 0.1%,

(which has been in place) since the introduction of yield curve control (in

September 2016)."

     --"Referring to the recent developments in long-term interest rates in

major economies, it can be considered appropriate for interest rate control in

Japan to allow the yields to move upward and downward by around 0.25%."

     -- "The BOJ should introduce forward guidance for policy rates and

strengthen its commitment to achieving the price stability target, in order to

ensure public confidence in its strong stance toward achieving the target."

     --"It is extremely important to further strengthen the framework of

monetary easing by introducing forward guidance as a new measure."

     --"In a situation where monetary easing is expected to continue, conducting

yield curve control and asset purchases in a more flexible manner should be

considered in order to adjust the policy framework so that it can function in a

competent manner over the period of easing's duration."

     --"Allowing flexibility in the purchase amount of exchange-traded funds

(ETFs) is appropriate because it enables effective purchases while enhancing the

sustainability of the policy."

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com