BOJ urged to set easing time limit

Bloomberg

The Bank of Japan should specify a two-year limit for its unprecedented monetary easing experiment to help quell bond-market volatility, according to one of the central bank’s board members.

BOJ minutes released in Tokyo Friday show that the suggestion was made by the unidentified policymaker at a meeting held from May 21 to 22. The bank could state that easing “should be restricted to about two years” and then be reviewed “in a flexible manner,” the board member said, according to the record of the meeting. Takahide Kiuchi is the board member previously publicly identified as favoring a time frame of about two years.

BOJ Gov. Haruhiko Kuroda is trying to jump-start the world’s third-biggest economy without triggering a jump in yields that makes the nation’s debt load unsustainable. Japan’s 10-year bond yields have swung from a record low of 0.315 percent to as much as 1 percent since the central bank announced in April a plan to double monthly debt purchases to more than ¥7 trillion.

The minutes showed the policymaker’s views that the bank’s communication about its easing plans “might be destabilizing expectations for the bond market” and increasing volatility.