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☆ Bank of Japan members saw no need for new yield control tweaks, September minutes show
▼ + stars: | 2023-11-06 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +2 min

Japanese national flag is hoisted atop the headquarters of Bank of Japan in Tokyo, Japan September 20, 2023. REUTERS/Issei Kato/File Photo Acquire Licensing RightsTOKYO, Nov 6 (Reuters) - Most Bank of Japan board members saw no need for additional tweaks to yield curve control and agreed to continued monetary easing to meet inflation and wage growth objectives, minutes of its September meeting showed on Monday. Board members shared the view that long term interest rates were moving in line with its market operation policy following the central bank's decision in July to make yield control more flexible, the minutes from the September meeting said. At the September meeting, the BOJ turned positive about its view on price growth, although central bank board members remained cautious about policy tweaks, Muguruma added. Several members said abolishing a negative rate and yield control policy would have to be discussed together with any successful achievement of the BOJ's 2% inflation target.

Persons: Issei Kato, Naomi Muguruma, Mitsubishi UFJ, Mitsubishi UFJ Morgan Stanley, Tetsushi Kajimoto, Tom Hogue, Sam Holmes Organizations: Bank of Japan, REUTERS, Rights, Mitsubishi, Mitsubishi UFJ Morgan, Mitsubishi UFJ Morgan Stanley Securities, Thomson Locations: Tokyo, Japan

☆ Rising yields may pressure BOJ to consider raising newly set cap
▼ + stars: | 2023-10-23 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

The BOJ remains a global outlier having maintained ultra-loose monetary stimulus even as major central banks elsewhere rapidly raised interest rates to fight rampant inflation. Meanwhile, rising U.S. bond yields are pulling their Japanese counterparts higher, complicating the BOJ's task of keeping local interest rates low. Among ideas that could be discussed would be to raise the ceiling for the 10-year bond yield beyond 1.0%, or steps that water down the BOJ's commitment to defend a set yield level, the sources said. "If the 10-year JGB yield rises to around 0.9%, the BOJ may need to take action," such as by raising the 1% cap, she added. In a Reuters poll in September, most analysts said they expect the BOJ to abandon YCC by the end of 2024.

Persons: Issei Kato, BOJ, YCC, Kazuo Ueda, Naomi Muguruma, Mitsubishi UFJ, Mitsubishi UFJ Morgan Stanley, Ueda, Leika Kihara, Sam Holmes Organizations: Bank of Japan, REUTERS, Treasury, Nikkei, Mitsubishi, Mitsubishi UFJ Morgan, Mitsubishi UFJ Morgan Stanley Securities, YCC, Thomson Locations: Tokyo, Japan, TOKYO

☆ Analysis: BOJ in a bind as price pressures heighten case for early policy tweak
▼ + stars: | 2023-07-14 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

But there's no clarity on what the final decision would be," said one of the sources on the chance of a policy shift in July. Lately, however, BOJ policymakers been dropping signs that inflation is being increasingly driven by improving consumer demand. CREDIBILITY ON LINEThere is no consensus within the BOJ on how soon it should start dialing back stimulus. Proponents of early action point to the rising cost of YCC, such as market distortions caused by the BOJ's huge bond buying. "A July policy tweak would contradict the logic the BOJ had been using to justify keeping easy policy," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.

Persons: Kazuo Ueda's reassurances, Ueda, Naomi Muguruma, Mitsubishi UFJ, Mitsubishi UFJ Morgan Stanley, Leika Kihara, Kim Coghill Organizations: Bank of, Mitsubishi, Mitsubishi UFJ Morgan, Mitsubishi UFJ Morgan Stanley Securities, Tokyo, Thomson Locations: TOKYO, Bank of Japan

☆ Analysis: Japan's upbeat wages may keep new BOJ chief on hook for policy tweak
▼ + stars: | 2023-04-11 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

However, a widely expected upgrade in the Bank of Japan's price forecasts due this month may show inflation staying near 2% for several years. "The BOJ will probably upgrade its price forecasts this month. In doing so, it could offer new guidance on future policy and tweak YCC around summer or autumn," she said. With more firms hiking prices and employees' pay, the BOJ may revise up the forecasts and see inflation stay around 2% through fiscal 2025, analysts say. "The BOJ may see scope to tweak YCC as early as June," he said.

Ueda, a 71-year-old former Bank of Japan (BOJ) policy board member, will succeed incumbent Haruhiko Kuroda, whose second, five-year term ends on April 8, according to documents presented to parliament on Tuesday. Analysts expect Ueda, who had warned of the dangers of premature interest rate hikes in the past, to hold off on tightening monetary policy. "Ueda is likely to focus on theory and empirical analysis in guiding monetary policy," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities. Upon parliament's approval, Ueda will chair his first BOJ policy meeting on April 27-28. A soft-spoken academic with a PhD from the Massachusetts Institute of Technology, Ueda is seen as a pragmatist who can adjust his views on monetary policy flexibly.

The massive buying highlights the increasing difficulty the central bank faces in sustaining its yield control policy, as inflation perks up well above its 2% inflation target. With its heavy-handed intervention drying up bond market liquidity, the BOJ is increasingly relying on a new funds-supply tool to keep the 10-year yield from breaching its 0.50% ceiling. The BOJ's bond buying in January, at 23.69 trillion yen ($182 billion), was the biggest amount on record and exceeded the previous high of 16.2 trillion yen marked in June 2022, central bank data showed. Under yield curve control, the BOJ guides short-term interest rates at -0.1% and the 10-year bond yield around 0%. The 10-year bond yield stood at 0.480% on Wednesday, remaining close to the BOJ's 0.5% cap.

☆ Japan yields tumble to well below policy cap as BOJ stands pat
▼ + stars: | 2023-01-18 | by ( Kevin Buckland | ) www.reuters.com time to read: +3 min

[1/2] A Japan Yen note is seen in this illustration photo taken June 1, 2017. The yield was at 0.51% prior to the Bank of Japan decision. "If they had expanded the band again or terminated YCC, yields would rise, which would be a de facto rate hike for a second consecutive meeting," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities. The BOJ also made use of a newly announced policy tool immediately, offering five-year loans to financial institutions to enhance liquidity, and showing its resolve to keep yields low. At the post-meeting press conference, Kuroda defended the change, reiterating that widening the yield band has made YCC "fully sustainable".

☆ Japan yields tumble below policy cap after BOJ keeps status quo
▼ + stars: | 2023-01-18 | by ( Kevin Buckland | ) www.reuters.com time to read: +2 min

The 10-year yield was last down 10.5 basis points at 0.395%, which would mark the biggest one-day decline in seven years. It was at 0.51% prior to the BOJ decision. Ten-year JGB futures jumped when they resumed trading following the midday break, trading up as much as 1.81 points to 146.65, the highest since Dec. 20. "If they had expanded the band again or terminated YCC, yields would rise, which would be a de facto rate hike," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities. The 10-year yield has repeatedly breached the BOJ's ceiling, only to close back at the 0.5% limit on each day.

☆ Japan yields stay above policy cap as BOJ sticks to status quo
▼ + stars: | 2023-01-18 | by ( Kevin Buckland | ) www.reuters.com time to read: +2 min

TOKYO, Jan 18 (Reuters) - Japanese government bond yields remained above the central bank's 0.5% policy ceiling on Wednesday, after the Bank of Japan unanimously decided to keep its yield curve controls in place. The benchmark yield was up 1 basis point at 0.51% as of 0250 GMT. In a relatively volatile session for cash bonds, the yield had started out flat and then eased as much as 1.5 basis points at one point to 0.485%. The 10-year yield has repeatedly breached the BOJ's ceiling, only to close back at the 0.5% limit on each day. Ten-year JGB futures were in the midday break at the time of the policy decision.

☆ Japan yields top BOJ cap for third day on eve of crucial policy decision
▼ + stars: | 2023-01-17 | by ( Kevin Buckland | ) www.reuters.com time to read: +2 min

The 10-year JGB yield rose 0.5 basis point to 0.505% as of 0820 GMT, although only one trade had been executed so far at 0136 GMT. "There is a strong cautiousness about taking fresh positions ahead of tomorrow," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities. So far this month, the central bank has snapped up more than 17 trillion yen in debt, an unprecedented amount that calls into question the sustainability of the programme. The stakes are extremely high for Governor Haruhiko Kuroda and his colleagues, with speculators waiting to sniff out any hint that the central bank is headed for the exit door after decades of stimulus. "There's not much left for the BOJ to do except abandon the YCC framework," Muguruma said.

☆ Analysis: Bank of Japan's yield curve control in danger as policy backfires
▼ + stars: | 2023-01-16 | by ( Leika Kihara | ) www.reuters.com time to read: +6 min

In a sign of its resolve to defend the yield cap, the BOJ on Monday announced plans to conduct additional, emergency bond-buying. To be sure, with global commodity prices falling, private analysts agree with Kuroda that inflation will slow back toward the BOJ's target later this year. It's better to remove the 10-year yield target, but overhauling YCC would raise questions of accountability." Data on Friday will likely show Japan's core consumer prices rose 4.0% in December, double the BOJ's target and a fresh 41-year high, a Reuters poll showed. "If markets continue to ask more from the BOJ, YCC may not last that long."

☆ Bank of Japan makes surprise policy tweak
▼ + stars: | 2022-12-20 | by ( ) www.reuters.com time to read: +8 min

ATUSHI TAKEDA, CHIEF ECONOMIST, ITOCHU ECONOMIC RESEARCH, TOKYO:"Today's move reflects the BOJ's determination not to alter its yield cure control policy. CAROL KONG, CURRENCY STRATEGIST, COMMONWEALTH BANK OF AUSTRALIA, SYDNEY:"I think the move was certainly unexpected, to say the least. MOH SIONG SIM, CURRENCY STRATEGIST, BANK OF SINGAPORE:"They've widened the band, and I guess that came earlier than expected. CHRISTOPHER WONG, CURRENCY STRATEGIST, OCBC, SINGAPORE:"The timing of the policy tweak is a surprise, though we have been expecting the move to come in 2Q 2023. "The tweak may seem modest but is significant for a central bank that has held dovish for a long time.

☆ Bank of Japan keeps ultra-low rates, dovish policy guidance
▼ + stars: | 2022-09-22 | by ( ) www.reuters.com time to read: +11 min

Sept 22 (Reuters) - The Bank of Japan maintained ultra-low interest rates and dovish policy guidance on Thursday, reassuring markets that it will continue to swim against a global tide of central banks tightening monetary policy to combat soaring inflation. "However, we believe that the BOJ will never allocate monetary policy for the FX rate adjustment and will stick to the YCC policy. "The most important thing is how the foreign-exchange rate reacts to that contrast in monetary policy between the U.S. and Japan. It also leaves the impression there will be no change in monetary policy during Kuroda's remaining term." He has said lesser about any merit of the weak yen recently out of consideration towards public sentiment against rising costs of living."

☆ BOJ's dovish deputy Amamiya top candidate as next head: Reuters poll
▼ + stars: | 2022-09-21 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

As Kuroda's right-hand man, he has consistently called for the need to keep monetary policy ultra-loose to ensure Japan makes a sustained exit from deflation. Like Amamiya, Nakaso is considered a safe pair of hands with his expertise on central bank affairs. The BOJ's dovish stance has made it an outlier among a global wave of central banks tightening monetary policy to combat surging inflation. "While Kuroda is at the helm, the BOJ's ultra-loose monetary policy won't change," said Takeshi Minami, chief economist at Norinchukin Research Institute. "But under a new leadership, the bank could reassess its view on the inflation outlook and thinking on monetary policy."

☆ BOJ to keep ultra-low rates, remain global outlier despite weak yen
▼ + stars: | 2022-09-21 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

Any such decision could drive down the Japanese currency further from 24-year lows hit in recent weeks, as investors focus on the widening gap between Japan's ultra-low interest rates and the U.S. Federal Reserve's aggressive rate hike plans. "With other central banks hiking rates, the BOJ's negative rate policy will come under the spotlight and may unleash further yen selling." The BOJ's rate review will be the first one for Hajime Takata and Naoki Tamura, who joined the nine-member board in July. They succeeded former commercial banker Hitoshi Suzuki and economist Goushi Kataoka, a vocal advocate of aggressive easing who consistently voted against keeping rates steady. A unanimous vote would suggest the two newcomers are unlikely to rock the boat on monetary policy for the time being.

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