TOKYO (Reuters) – Bank of Japan policymakers began talks in October on ways to make their big incentive program more sustainable, with one member calling for a tweak to the bank’s massive purchase of risky assets, meeting minutes showed Wednesday.
The central bank maintained a stable monetary policy in October on the assumption that the economy was heading for a moderate recovery thanks to a package of measures aimed at easing funding streams for companies affected by the coronavirus pandemic.
With the economy recovering from the immediate panic from the pandemic, the board also discussed the long-term path towards meeting the BOJ’s 2% inflation target, the minutes showed. .
One of the nine board members highlighted the need to consider long-term tweaking when the BOJ bought risky assets like exchange-traded funds (ETFs), he pointed out.
“Given that the cash rebate was expected to be long, the BOJ should look again at ways to strengthen the sustainability of the measure so that it would not be difficult for them to make such a purchase when necessary (making that), ”it was said that the member was saying. .
Another member said BOJ’s emergency response measures, if sustained, could delay structural reforms essential for sustainable economic growth, the minutes showed.
In a sign the board was pushing for a long-term battle to reduce the pressure from COVID-19, one board member said the BOJ needs to “consider in depth” policy responses aimed at the inflation target 2 % of them achieved, according to the minutes.
Under the control of a stated policy yield curve, the BOJ manages short-term rates at -0.1% and 10-year yields around 0% through large bond purchases. It also buys risky assets such as ETFs and created a lending facility to help companies with COVID-19.
After maintaining a stable policy in October, the BOJ in December expanded its emergency response measures and unveiled a plan to examine more effective ways to achieve its pricing target.
Reciting with Leika Kihara; Edited by Chris Gallagher and Sam Holmes