The Bank of Japan should review its yield curve control program under its incoming governor, a former top Finance Ministry official said ahead of the central bank’s first leadership change in a decade.
The ongoing monetary easing has caused side effects, including distortions in the bond market, a drop in the currency and a weakening of fiscal discipline, according to Takehiko Nakao, a former vice minister for international affairs. He stressed the need for the policy tweak while also noting that such a move will come with risks.
"The yield curve control should be reviewed, even if that results in short-term shocks,” Nakao said in an interview Monday. He didn’t specify the preferred timing or detailed process for the review. "This can’t go on forever.”