The release of the Bank of Japan’s March meeting summary today claimed that easy monetary policy will linger for a while and that there is no need to increase the central bank’s bond yield targets.

According to remarks from its March 15-16 meeting, BOJ board members stated that monetary policy will be kept on hold. This is due to consumer price growth remaining distant from the BOJ’s 2% inflation target.

BOJ March meeting summary

Members rejected speculations that the central bank would have to increase its 10-year government bond yield target due to growth in bond yields overseas. BOJ Governor Haruhiko Kuroda even gave his strongest denial of the possibility of withdrawing the bank’s massive stimulus some time in 2017, pressing that there is no reason to raise bond yield targets. The bank also claimed that it should focus solely on the domestic economy.

“There is no reason to reduce the level of monetary accommodation in light of current economic and price developments,” Kuroda said in an event previously on Friday. “I don’t think we need to raise our interest-rate targets now. It’s unclear whether inflation will hit our 2% target before my term ends next April.”


The BOJ kept its short-term interest rate target of minus 0.1 and a pledge to guide the 10-year government bond yield at roughly zero percent.

Kuroda stated the central bank may have discussions about increasing its interest-rate targets if Japan’s inflation ramps up sharply in the future. However, he also said that the BOJ won’t raise its bond yield targets just because overseas long-term interest rates were climbing, or in reaction to upsurges in a single price indicator.

“When deciding on monetary policy, we must look at the underlying trend of inflation. We won’t change monetary policy just because oil price rises push up inflation,” he said.

Furthermore, the central bank sees no immediate need to scale back the pace of purchases of its exchange-traded funds, dismissing the notion the BOJ could decrease buying as Japanese stock prices were on a firm note.

Some members, however, expressed worries about the BOJ's ability to control the 10-year yield in the future.

“Some market participants argue that the Bank needs to change the monetary policy in response to the rise in the long-term yields overseas,” one member stated. “However, the monetary policy in Japan should be decided based on Japan's economic activity and prices. It will be a considerable length of time before the Bank will need to change its monetary policy.”

Economy, inflation

The former top Japanese currency diplomat underplayed the risk that US President Donald Trump’s administration will lean toward excessive protectionism since the global community benefits from free trade, which includes the United States. Kuroda claimed the global economic recovery is gaining momentum, with US business confidence improving sharply on hopes for growth-boosting policies from Trump’s administration.


While Japan’s economy was slowly recovering, it still lacked enough momentum to quickly boost inflation to the BOJ’s target, Kuroda said, adding that risks to both the growth and price outlooks were skewed to the downside.

“It’s obvious the BOJ should maintain the current yield curve and make the most of improvements in the global economy,” Kuroda said, underscoring his resolve to maintain a bias even as the Federal Reserve raises interest rates.

Japan’s stagnant economy has shown hints of life in recent months, with exports and factory output benefiting from a recovery in global demand. Emphasizing the BOJ governor’s optimism, Japanese manufacturers’ business confidence touched a three-year high in March.

However, a business survey hinted manufacturing activity expanded at a slightly slower pace in March than in February, stressing the fragile nature of the recovery as fears of Trump’s protectionism cloud the outlook.

Some analysts claim the BOJ may be forced to increase its yield targets to avoid accelerating bond purchases if Japanese long-term rates follow global bond yield rises, which are being driven by bets of higher US rates.

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