Bank of Japan policymakers concluded there was no need for additional steps in June to contain interest rate spikes, as the central bank's flexible bond-buying operation had curbed market volatility, the minutes of their meeting last month showed Wednesday.
At the June 10-11 meeting, the nine-member Policy Board discussed the possibility of extending the term of fixed low-interest-rate loans to financial institutions amid rising long-term interest rates and sliding Japanese stocks at the time, the minutes showed.
Under its fixed-rate fund provision program, the BOJ currently offers maximum one-year loans to financial institutions such as banks at an annual interest rate of 0.1 percent, taking government bonds and other securities as collateral.
The provision of longer-term fixed-rate loans would make it easier for financial institutions to buy longer-term bonds, thus contributing to lowering bond yields.
In the meeting, members said introducing such operations "would in itself enhance confidence in the markets, which in turn was expected to restrain excessive interest rate fluctuations."
But some members argued that the extension "could be misinterpreted by market participants as a revision to the monetary policy framework or a measure conveying a message regarding a change in the policy duration, rather than just an expansion of market operation measures," the minutes said.
Some members also said that the bank's staff were "given room for flexibility" in conducting bond-buying operations at this moment and that the BOJ was able to promote stable formation of interest rates.