BOJ Policy Tweak Followed Discussions on Side-Effects in June: Minutes

August 3, 2018

Tokyo- A number of Bank of Japan policymakers discussed the side effects of the central bank's massive monetary easing policy at their June 14-15 meeting, according to the minutes of the meeting released on Friday.

Following the June meeting, the BOJ Policy Board decided at a meeting earlier this week to tweak the easing policy to reduce the side effects, including on the Japanese government bond market.

During the June meeting, a BOJ board member was quoted as saying that the board, at its next meeting, should "examine and discuss...the effects on the JGB market stemming from continued powerful monetary easing."

Some members said the side effects of the BOJ's massive JGB purchases on the market's liquidity and functions "had become evident in various aspects recently."

A member said it was "important to conduct market operations more flexibly with a view to maintaining the functioning of financial markets as much as possible."

Some participants pointed to a need to "continue to carefully examine the effects of the prolonged low-yield environment" on financial institutions.

Meanwhile, one participant questioned the view that low interest rates could reduce the easing policy's intended positive effects by worsening banks' profitability. Jiji Press