Japanese government representatives at the Bank of Japan’s December policy meeting requested an urgent time out in a likely sign of their surprise at planned adjustments to the bank’s yield curve control program.
(Bloomberg) — Japanese government representatives at the Bank of Japan’s December policy meeting requested an urgent time out in a likely sign of their surprise at planned adjustments to the bank’s yield curve control program.
The December meeting was adjourned from 10:51 a.m. to 11:28 a.m. before concluding at 11:54 a.m., according to minutes of the meeting released Monday. The suspension was the first since June 2021.
The request suggests the tweaks that went on to roil global financial markets prompted an unplanned discussion among senior government officials before the BOJ announced them.
Governor Haruhiko Kuroda and his fellow board members decided to double the movement range around 10-year bond yields at the meeting.
While the central bank characterized the widening of the range as a move to improve the sustainability of easing, many market participants interpreted it as a measure to pave the way for a policy pivot.
Representatives from the Ministry of Finance and Cabinet Office eventually signed off on the move and accepted the explanation that it was aimed at enhancing the sustainability of monetary stimulus, the minutes show.
Three quarters of economists surveyed by Bloomberg earlier this month say the move was a step toward policy normalization. That perception helped fuel the most intense market attack on Kuroda’s monetary easing program of his decade-long term.
Aggressive bets against the bank’s stimulus framework have waned for now after the BOJ stood pat at last week’s gathering.
The record of the December meeting shows that board members were aware of the risk of the move getting interpreted in a way not intended by the bank. Members discussed the need to clearly communicate that the tweak to yield curve control wasn’t a step toward normalization.
The representative from the Cabinet Office also said it was important for the BOJ to carefully explain its intentions.
Kuroda reiterated that he had no plan to widen the band again at a post-gathering press conference last week.
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