At Least One BOJ Board Member Already Wants Wider Yield Range

(Bloomberg) -- The Bank of Japan may tolerate an even higher yield on long-term bonds than the 0.2 percent given by Governor Haruhiko Kuroda, if the latest summary of opinions is any guide.

The summary of the July 30-31 meeting released Wednesday showed one member had wanted freedom for yields to move up and down by around 0.25 percent on either side of the zero percent target.

While Deputy Governor Masayoshi Amamiya acknowledged "nuanced differences" among board members when he spoke in Kyoto days after the board meeting, the summary gives more ammunition to expectations the BOJ could further widen its range.

Another member said it is important to design forward guidance to stimulate aggregate demand and inflation expectations so that monetary easing will not become prolonged, according to the summary.

The BOJ board had introduced forward guidance for the first time at the meeting, saying it will keep low interest rates for “an extended period of time.”

Another member had said that allowing flexibility in the purchase amount of exchange-traded funds is appropriate, giving further weight to expectations that the pace of buying may slow, as has been the case with Japanese government bonds.

Underscoring the need for a flexible and sustainable policy, the summary showed many board members see the 2 percent inflation target as distant, with one even saying "the possibility of the inflation rate increasing gradually toward 2 percent is low."

The summary does not identify who said what.

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