Bank of Japan officials are wary of tweaking or scrapping their yield control stimulus at a policy meeting next week so soon after the banking crisis overseas clouded the outlook, according to people familiar with the matter.
(Bloomberg) — Bank of Japan officials are wary of tweaking or scrapping their yield control stimulus at a policy meeting next week so soon after the banking crisis overseas clouded the outlook, according to people familiar with the matter.Â
BOJ officials instead see a need to keep their cap on government bond yields in place for now to support the economy while they wait for more progress toward achieving their stable inflation target, the people said. The two-day meeting, the first under Governor Kazuo Ueda, finishes on April 28.
The final policy decision will be made after assessing economic data and developments in financial markets up until the last moment, the people said.Â
The officials see the failure of banks in the US and Europe as increasing uncertainties for the economy, the people said. The banking crisis and an easing of upward global yield pressure have meanwhile helped smooth out the shape of Japan’s bond yield curve, suggesting little immediate need to address the side effects of the yield curve control program, the people added.Â
Since being tapped to lead the central bank, Ueda has indicated that he is in no rush to make big policy changes. Still, traders remain wary of the risk of another surprise by the bank.
Officials are likely to discuss whether the BOJ needs to tweak the wording of its guidance on policy at this meeting or if it can wait until later, the people said. The existing guidance mentions Covid-19, a factor that seems a less important risk for the economy now, the people said.Â
Even if a change is made to the guidance, the bank intends to indicate its stance to continue with easy policy, the people said.
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