Ex-BOJ’s Shirai: BOJ may tolerate falls in yield to fight-off Yen spike

In an interview with Reuters on Friday, former Bank of Japan (BOJ) board member Sayuri Shirai expressed her view on the Bank of Japan’s (BOJ) monetary policy stance, in the wake of the recent Yen appreciation.

Key Quotes:

“Cutting the BOJ’s rate targets or widening the band in which 10-year yields are allowed to move would be too controversial, as doing so could push yields deeper into negative territory and strain financial institutions’ profits.” 

“The BOJ will probably maintain its current framework and the target range, but tolerate market-driven falls in yields.” 

“That way, it can head off excessive rises in the yen, without hurting financial institutions.” 

“The BOJ probably wants to avoid expanding stimulus for as long as possible.” 

“It has already done so much and there’s few policy tools left at its disposal.”