Bank of Japan Deputy Governor Masazumi Wakatabe signaled there will be no policy change next month shortly before the end of his term and warned against further adjustments to the central bank’s yield curve control program.
(Bloomberg) — Bank of Japan Deputy Governor Masazumi Wakatabe signaled there will be no policy change next month shortly before the end of his term and warned against further adjustments to the central bank’s yield curve control program.
The remarks by one of the strongest easing advocates of the nine-member board come after the BOJ’s surprise December decision to double the movement range around its yield target. That move has continued to fuel speculation that steps toward normalization may materialize sooner rather than later.
“The modification was done with the aim of enhancing the sustainability of monetary easing under yield curve control,” Watakabe said in a speech Thursday in Shizuoka, central Japan. “The bank’s commitment to continuing with monetary easing has not changed at all.”
His comments echo Governor Haruhiko Kuroda’s repeated messages that the bank must continue with easing to achieve stable inflation that’s backed by stronger wage growth. Together their comments signal there will be no pivot at their last policy meeting on March 9-10, right before a new leadership is set to take the BOJ’s helm.
“We have to be very, very cautious about making a decision on widening the movement band” again, Wakatabe said at a press conference following the speech. A balance is needed between making easing sustainable and its impact on long-term rates, he said. “If we only focus on that part then it’s problematic in terms of the effectiveness of monetary easing.”
Wakatabe will finish his five-year term on March 19, a few weeks before Kuroda is set to conclude his decade-long stint on April 8.
Given his track record, Kuroda could still surprise BOJ watchers. December’s doubling of the yield band came despite his saying in the past that the move would be equivalent to a rate hike and harmful for the economy.
With that abrupt turn-around fresh in their minds, market players are likely to remain on high alert over whether the governor leaves with a unexpected parting shot at his final meeting.
–With assistance from Sumio Ito.
(Adds comments from press conference)
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