Coordinating BOJ, government policy goals under review – MNI

"Tweaks to monetary policy that could include a focus on the five-year government bond tenor but not change easy policy, are under discussion to keep the Bank of Japan (BOJ) in step with the government's efforts to ease the impact of high energy prices," MNI reports, citing sources familiar with the BOJ’s thinking.

Key points

“BOJ officials see shortening the 10-year Japanese Government Bond (JGB) policy interest rate to the five-year zone may be better tool than widening the 10-year interest rate range.”

“Still, some BOJ officials said such a move would be classed as a tightening policy and are concerned over how to communicate.”

“BOJ officials said, any policy action cannot have the unintended effect of making the market think it is meant to signal the unwinding of easy policy.”

“At the same time, the prospect of headline consumer prices reaching near 2% in or after April however has drawn concern from the government ahead of an upper house election this summer with steps already taken including subsidies for petrol and other support measures for households and companies.”

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