BOJ December meeting Summary of Opinions: Must maintain easy policy

From the Bank of Japan:

Summary of Opinions at the Monetary Policy Meeting on December 19 and 20, 2022

Full text is here

Headlines via Reuters

• BOJ must maintain YCC until needed to stably, sustainably hit price goal
• BOJ must maintain easy policy as Japan in critical phase in hitting price goal
• Japan showing signs of wage rises, positive economic cycle but appropriate to maintain easy policy for time being
• Bond market function worsening which, if continued, would disrupt positive effect of BOJ's easy policy
• Corporate bond spread widening as bond market function deteriorates, sour investors' sentiment
• Appropriate to widen BOJ's yield Yield A yield represents the earnings generated by an investment or security over a certain time period. Yields are typically displayed in percentage terms and are in the form of interest or dividends received from it.These figures do not include the price variations, which separates it from the total return. Consequently, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as A yield represents the earnings generated by an investment or security over a certain time period. Yields are typically displayed in percentage terms and are in the form of interest or dividends received from it.These figures do not include the price variations, which separates it from the total return. Consequently, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as Read this Term band due to concern over negative impact on bond market from YCC
• Widening of yield band is not shift from loose monetary policy, aimed at making current stimulus more sustainable

• BOJ must widen trade band to address declining market functions but even so, no change to fact powerful monetary easing continues
• BOJ must widen yield band to address distortion in 10-year JGB pricing but this is not a step toward exit from ultra-easy policy
• by pledging to flexibly buy bonds, BOJ would enhance sustainability of its monetary easing

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Countering the ill-effects impacting the bond market were a prime reason cited by the BOJ when they widened the band. Repeated above.

Also repeated are:

• need wage growth
• widening made easy policy more sustainable
• the widening is not a step toward exiting easy policy

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More points from the Summary:

• BOJ must humbly scrutinise how much widening of yield band would improve market function
• When BOJ eyes exit from easy policy, it must check to see whether market players are prepared for such move, where risks could lie when interest rates rise
• Appropriate to maintain easy policy now but at some point, BOJ must conduct examination of its policy to gauge balance of pros and cons of current measures
• Tweaking BOJ’s price target would be inappropriate as it would dilute its policy goal and make its monetary policy effect insufficient
• Govt rep said understand today's debated step is aimed at conducting more sustainable monetary easing
• Govt rep said hope BOJ continues to work closely with govt, guide policy appropriately with eye on economic, price, financial developments
• Inflationary momentum may be increasing in japan as prices rising not just for goods but services
• Consumer price conditions approaching conditions seen before japan slid into deflation
• There is still some distance toward sustainably, stably hitting price target
• Year-on-year rise in import prices clearly narrowed in November as commodity prices falling from peak levels
• There is good chance wages will rise significantly due to robust corporate profits
• More firms becoming keen on raising wages as job market tightens, which could help push up inflation sustainably

Background to this release is here:

• We'll hear from the BOJ today with more on the JGB YCC band change that sent yen rocketing