• Kyodo


Bank of Japan Deputy Gov. Masazumi Wakatabe said Wednesday the review of the BOJ’s policy tools for release in March is not aimed at reducing monetary easing but to respond quickly to future shocks to the economy.

Wakatabe told business leaders from Kanagawa Prefecture near Tokyo in an online meeting that economic activity and prices will face downward pressure “for a prolonged period” due to the coronavirus pandemic, but brushed off concern that Japan will return to deflation.

“In conducting the upcoming assessment, I would like to emphasize that the bank does not intend to tighten monetary easing. It also does not aim at only containing the costs of policy measures,” Wakatabe said at the virtual gathering.

“Rather, the bank will consider how to be nimble in conducting effective monetary easing while taking care of costs,” he said.

The BOJ’s review includes looking at the buying of assets such as Japanese government bonds and exchange-traded funds. BOJ Gov. Haruhiko Kuroda has suggested that it will lead to fine-tuning, not an overhaul of the current monetary easing framework.

According to the minutes of a BOJ policy meeting in January, a board member proposed allowing long-term interest rates to move more widely, after criticism grew that the central bank’s “yield curve control” scheme is hurting the profitability of financial institutions.

The central bank has kept short-term interest rates at minus 0.1% while guiding 10-year Japanese government bond yields to around 0%, in a program aimed at keeping interest rates low and stable to support the economy.

The pandemic has made it even more difficult for the BOJ to attain its 2% inflation target, which was set in 2013, as core consumer prices that exclude volatile fresh food items have continued to fall. The bank is now bracing for a longer period of monetary easing.

“Since downward pressure on economic activity and prices is likely to continue for a prolonged period, it will take considerable time to achieve the price stability target of 2%,” Wakatabe said.

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