A Bank of Japan board member has proposed allowing long-term interest rates to move more widely, a summary of opinions at a January meeting showed Friday, as the central bank reviews its monetary easing policy tools amid the novel coronavirus pandemic.
At the two-day meeting through Jan. 21, one of the nine board members pointed to heightened risks of deflation in Japan due to a recent resurgence in COVID-19 cases and said it was appropriate to strengthen the bank's commitment to monetary easing. The pandemic has made the BOJ's 2% inflation target even more elusive.
"While monetary easing is expected to be prolonged, allowing 10-year Japanese government bond yields to move upward and downward to some extent will meet the investment-management needs of financial institutions through market functioning, and will thereby contribute to financial system stability," the member said.