TOKYO (Reuters) – Government representatives attending the Bank of Japan’s December policy meeting were given a half-hour adjournment to communicate with ministries, minutes showed. The decision to adjust its yield control policy may have been hastily planned.
At the 19-19 meeting in December, the Bank of Japan maintained its ultra-loose monetary policy, but unexpectedly adjusted Shocked markets by adopting a yield curve control (YCC) policy that allows long-term interest rates to rise.
Before the nine-member committee voted on the steps, government representatives asked the meeting to be adjourned for about 30 minutes, minutes of which were shown on Monday. According to the minutes, the Bank of Japan meeting.
“The government understands that the matters discussed today are aimed at conducting monetary easing in a more sustainable manner to achieve the BOJ’s price target rget,” a Ministry of Finance (MOF) official who attended the meeting was quoted as saying. The quote said referring to the central bank’s inflation target.
Another government representative attached to the Cabinet Office urged the Bank of Japan minutes to show caution about the impact of rising inflation, supply constraints and market volatility on the Japanese economy. The minutes of the meeting showed the Bank of Japan’s discussions.
Two government representatives — one from the Finance Ministry and the other from the Cabinet Office — are legally entitled to attend the Bank of Japan’s policy meetings and comment on the government’s policy decisions, despite the They cannot vote.
The obvious reason for the delegates to ask for an adjournment was to contact their ministries to find out what the government was saying about the BOJ’s decision to adjust the YCC – indicating that they were not expecting it
Under YCC, BoJ targets short-term interest rates at -0.1%, while 1-year bond yields are around 0%, tolerance very small.
Range set at Annual yield target doubled, 0.5ppt up and 0.5ppt down at Dec meeting , a move aimed at removing market distortions caused by the Bank of Japan’s massive bond purchases.