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From the Bank of Japan:
Summary of Opinions at the Monetary Policy Meeting on December 19 and 20, 2022
Headlines via Reuters
- BOJ must maintain YCC until needed to stably, sustainably hit price goal
- BOJ must maintain easy policy as Japan in critical phase in hitting price goal
- Japan showing signs of wage rises, positive economic cycle but appropriate to maintain easy policy for time being
- Bond market function worsening which, if continued, would disrupt positive effect of BOJ’s easy policy
- Corporate bond spread widening as bond market function deteriorates, sour investors’ sentiment
- Appropriate to widen BOJ’s yield band due to concern over negative impact on bond market from YCC
- Widening of yield band is not shift from loose monetary policy, aimed at making current stimulus more sustainable
-
BOJ must widen trade band to address declining market functions but
even so, no change to fact powerful monetary easing continues - BOJ must widen yield
band to address distortion in 10-year JGB pricing but this is not a
step toward exit from ultra-easy policy - by pledging to
flexibly buy bonds, BOJ would enhance sustainability of its monetary
easing
–
Countering the ill-effects impacting the bond market were a prime reason cited by the BOJ when they widened the band. Repeated above.
Also repeated are:
- need wage growth
- widening made easy policy more sustainable
- the widening is not a step toward exiting easy policy
–
More points from the Summary:
-
BOJ must humbly scrutinise how much widening of yield band would
improve market function - When BOJ eyes exit
from easy policy, it must check to see whether market players are
prepared for such move, where risks could lie when interest rates
rise - Appropriate to
maintain easy policy now but at some point, BOJ must conduct
examination of its policy to gauge balance of pros and cons of
current measures - Tweaking BOJ’s
price target would be inappropriate as it would dilute its policy
goal and make its monetary policy effect insufficient - Govt rep said
understand today’s debated step is aimed at conducting more
sustainable monetary easing - Govt rep said hope
BOJ continues to work closely with govt, guide policy appropriately
with eye on economic, price, financial developments - Inflationary
momentum may be increasing in japan as prices rising not just for
goods but services - Consumer price
conditions approaching conditions seen before japan slid into
deflation - There is still some
distance toward sustainably, stably hitting price target - Year-on-year rise in
import prices clearly narrowed in November as commodity prices
falling from peak levels - There is good chance
wages will rise significantly due to robust corporate profits - More firms becoming
keen on raising wages as job market tightens, which could help push
up inflation sustainably
Background to this release is here:
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