The Bank of Japan has nearly exhausted its policy ammunition for boosting the economy, as deepening negative interest rates — seen as the most likely step if it were to expand stimulus — will do more harm than good, former BOJ Deputy Gov. Toshiro Mutoh has said.
Under a policy dubbed yield curve control (YCC), the BOJ guides short-term interest rates at minus 0.1 percent and long-term rates around 0 percent via huge asset buying in hope of hitting its 2 percent inflation target.
Mutoh, who retains influence on economic policy due to his close ties with incumbent financial bureaucrats, said it made sense for the BOJ to maintain its massive stimulus as inflation remained distant from its target.