[ad_1]
TOKYO – The central bank of Japan should follow the contours of its current policy at its next meeting, say the people who know his thinking, despite the complaints of the banks.
By changing its interest rate targets, the yield on 10-year government bonds rose 0.09% Monday in Tokyo, up from 0.03% on Friday night. The yen is appreciated against the dollar in Tokyo but has fallen back later.
People familiar with the thought of the BOJ have said that officials are looking at some adjustments, such as more flexibility in its target of zero for yield on 10-year government bonds. Currently, the central bank is applying a tight cap, reducing volatility to a degree that some market participants find unsettling.
There were six days this year where 10-year treasury benchmark bonds were not trading at all. Quick market
The BOJ's meeting of July 30-31 comes at a time of mixed economic signals: growth picks up, economists say, and corporate earnings strong, but inflation is still far from the point of view. 2% BOJ target and the decline in profits of some banks – penalized by low long-term interest rates that leaves few opportunities to take advantage of loans.
Customs duties on imports, including Japanese steel, are another source of concern
Inflation excluding fresh food and energy has only been 0, 2% in June, slowing for the third month in a row. The BOJ, regardless of the global trend led by the Federal Reserve, has not begun to tighten.
In addition to studying flexibility on rate targets, the BOJ could also discuss ways to buy its stock. (about $ 54 billion) each year in stock – more sustainable, according to people.
None of the changes would add to a fundamental policy change, they said. With low inflation, the Bank of Japan does not want to raise interest rates; Other factors, including the bankers' concerns, further complicate the easing.
"If prices are low, a natural choice for a central bank would be additional easing," said one of the participants. "But it is difficult for the BOJ, for example, to increase government bond purchases to 100,000 trillion yen or further reduce the short-term interest rate target." negative territory. " The current target of buying bonds is 80 trillion. ] The minutes of the BOJ's April meeting showed divergent opinions on the nine-member board of directors. One member, who was not named, said the BOJ should think about raising rates because the impact of monetary easing was "getting tougher" for financial institutions . Others said that the financial system worked well and that higher rates would hurt the economy.
"It would be puzzling that the BOJ raises interest rates – which could be considered an exit policy – while prices are still low with the bank's thinking." Another said: "The BOJ conducts monetary policy through financial institutions. The business environment must be sustainable for them. "
The impact of negative rates is particularly important for regional banks as they still largely depend on lending; the largest banks based in Tokyo are earning more from fees and business overseas.
"There are worries about the side effects of the powerful monetary easing program"
Koji Fujiwara,
the president of the Japan Bankers Association and general manager of the main banking unit of Mizuho Group Inc., in May
. However, a June report from the regional banking association said all of its members have recorded profits – both operational and net. During the same period, operating profit was higher than the previous year, despite the reduction in credit margins, partly because the improvement in the economy meant less. bad debts.
At its next meeting During the week, the BoJ will release its quarterly economic outlook and should continue to reduce its inflation forecasts. The bank's board currently provides that the index of basic consumer prices, all prices, excluding fresh food, will increase by 1.3% for the year ending in March 2019 and 1.8% the following year.
Write to Megumi Fujikawa at [email protected] and Kosaku Narioka at [email protected]
Source link
