Bank of Japan (BOJ) Vice Governor Shinichi Uchida said a change to the central bank’s bond yield control policy would “undoubtedly” be considered if economic and pricing conditions warrant phasing off support.
In his first public appearance since taking the role earlier this month, Uchida said the BOJ may examine different tactics or policy initiatives, including some not implemented yet, once prospects for inflation to meet its target increase consistently.
“Yield curve control may need to adjust under certain scenarios. If conditions improve, an adjustment is likely “Uchida stated.
“We won’t rule out any alternative, if we see it as necessary for Japan’s economy and attainment of price stability,” Uchida said when asked by an opposition legislator whether the BOJ might boost its long-term yield goal while maintaining short-term interest rates relatively low.
Uchida said trend inflation was “very crucial” in determining whether Japan can retain the BOJ’s 2% price objective.
He noted that the central bank would consider all data when establishing monetary policy, not just one set of indications.
Central banker Uchida is one of two deputy governors. Ryozo Himino, another deputy, was Japan’s financial regulator. Both started on March 20.
The BOJ controls short-term rates at -0.1% and the 10-year bond yield at 0% under yield curve control (YCC) to reflate GDP and preserve its 2% inflation objective.
Analysts and politicians have criticized the BOJ’s massive bond purchasing to preserve its yield goal for market dysfunction and yield curve distortion.
With inflation over its objective, investors speculate that the next governor Kazuo Ueda may adjust or terminate YCC when Haruhiko Kuroda’s second, five-year tenure ends in April.
BOJ officials, including Kuroda, have repeatedly stated the central bank would not reduce its enormous stimulus until cost-push inflation evolves into demand-driven inflation and greater wage growth.
On Wednesday, Deputy Governor Himino told the same House committee that the BOJ must continue its ultra-loose policy to assist the economy and increase wages.
