The Bank of Japan kept its monetary policy unchanged Wednesday, with officials citing an absence of conclusive economic data to prompt further easing.
The central bank’s Policy Board voted unanimously to keep feeding money into banks’ current accounts at the BOJ to maintain the outstanding balance between 15 trillion yen and 20 trillion yen. It was the last board meeting presided over by Gov. Masaru Hayami, whose term expires March 19.
The target balance will rise to between 17 trillion yen and 22 trillion yen beginning April 1, when the Postal Services Agency will become Japan Post, which will have a current account with the BOJ.
“This is not a policy change,” the BOJ said.
Market attention has shifted to how Hayami’s replacement, Toshihiko Fukui, and his two deputy governors will juggle their policy differences, and whether they will try to persuade the Policy Board to depart from current policy.
In the days leading up to Wednesday’s meeting, volatile stock prices were offset by stable short-term money markets, giving the Policy Board little reason to reverse course and support more drastic money-priming measures, a senior BOJ official said.
The BOJ said it will provide funds to keep the balance above the target range “when necessary to secure financial market stability toward the end of the fiscal year.”
Shorter term sought A ruling coalition lawmaker urged Wednesday that the term of office for the Bank of Japan governor be shortened to three years.
“In light of kaleidoscopic changes in the economic situation, I think (the term of) five years is too long,” Toshihiro Nikai, secretary general of the New Conservative Party, said during a meeting of executives of the three governing parties, according to coalition officials.
Nikai, a former transport minister, said it is worth considering revising the BOJ law to “shorten the term to around three years, while continuing to allow the BOJ governor to be reappointed.”
He said, however, that he did not believe such consideration should be made right away, citing the upcoming helm change at the BOJ.
“I don’t intend to oppose the latest appointment” made by the government, Nikai said, adding that he believes his proposal can be discussed after the new governor assumes office later this month.
The government has nominated Toshihiko Fukui, a former deputy governor of the central bank, to succeed BOJ Gov. Masaru Hayami, whose five-year term expires March 19.
The NCP is the smallest partner in the Liberal Democratic Party-led ruling bloc, which also includes New Komeito.
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