The Bank of Japan has pushed back on speculation its recent policy adjustment marked the start of a tightening cycle.
Deputy Governor Shinichi Ichida on Wednesday reiterated the central bank’s flexible threshold for tolerance on long-term bond yields is merely a necessary modification to sustain its ultra-easy monetary policy position.
On Friday, the BOJ unexpectedly loosened its yield curve control, a move some market watchers said marked the start of the end of the Japanese central bank’s ultra-easy monetary policy position. The so-called YCC is a policy tool used to target longer term interest rates.
Needless to say, we do not have an exit from monetary easing in mind.
Shinichi Ichida
Deputy governor, Bank of Japan
“The Bank’s decision to conduct yield curve control with greater flexibility aims at patiently continuing with monetary easing while nimbly responding to both upside and downside risks under extremely high uncertainties for economic activity and prices at home and abroad,” Ichida said in prepared comments for a public address in Chiba prefecture.
“Needless to say, we do not have an exit from monetary easing in mind,” he added.
Speculation about such an exit emerged after the BOJ’s surprise decision to offer to “flexibly” purchase 10-year Japanese government bonds at 1% yield through fixed-rate operations. The central bank, however, stuck to its existing plan to allow yields to fluctuate in the range of around plus and minus 0.5 percentage points from its 0% target level.