BOJ Summary Shows Board Worried About Being Misread at Review


The Bank of Japan dropped another hint it will be forceful in preventing bond yields from rising, underlining the message that recent policy tweaks shouldn’t be read as any retreat from easing.

The bank should respond “strictly” to movements in 10-year bond yields given an upper limit of around 0.25%, a board member is cited as saying in a summary of opinions released by the BOJ on Monday. The summary outlines the discussions at this month’s policy review.

Like all of the bank’s summaries, this one from the BOJ’s most consequential meeting in years doesn’t indicate which board members are speaking and the bank chooses what it includes. The message seems designed to underline the bank’s commitment to its massive easing program, following policy tweaks that could be read otherwise.

The March policy review concluded with a flurry of adjustments meant to give the bank more flexibility in executing its stimulus over the longer term given continued weakness in prices. Moves included scrapping a goal for annual stock-fund purchases and clarifying its tolerance for small moves in 10-year bond yields around its 0% target.

While the Federal Reserve and other central banks are still concerned about the risk of inflation, the BOJ sees weak price momentum persisting for years to come. Governor Haruhiko Kuroda himself says he doesn’t see inflation reaching the bank’s 2% target anytime before 2024.

“Unlike Europe and the United States, there is still a higher risk of deflation than of inflation in Japan,” one BOJ board member is cited as saying in the summary.

One BOJ Member: Should Strictly Defend Upper Limit of Yield Band

The document released Monday showed board members concerned with making sure that investors didn’t read their actions as signifying any stepping back from easing.

It is “crucial to deliver a clear message” that bank will keep easing under its commitment to stoke inflation, one member said. Another opinion was that changes to the BOJ’s stance on buying stock funds should be couched in terms that didn’t allow anyone to interpret the move as tightening.

“It is necessary to be careful so as to avoid a misunderstanding that the Bank has adopted a less accommodative stance on monetary policy,” the member said.

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