BOJ’s Takata calls for overhaul of ultra-loose monetary policy

By Tetsushi Kajimoto

TOKYO (Reuters) -Bank of Japan board member Hajime Takata said on Thursday the central bank must consider overhauling its ultra-loose monetary policy, including an exit from negative interest rates and bond yield control.

“It’s necessary to consider taking a nimble and flexible response, including on how to exit, or shift gear from the current extremely accommodative monetary policy,” he said in a speech.

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Measures that should be under consideration include an exit from yield curve control (YCC), negative interest rates and a tweak to the BOJ’s commitment to keep expanding its monetary base until inflation stably exceeds 2%, he said.

“While there are some economic uncertainties, I feel that we’re finally seeing prospects for achieving our 2% inflation target,” Takata said, pointing to growing signs of change in companies’ long-held practice of forgoing wage and price hikes.

The dollar fell 0.33% to 150.21 yen, while the benchmark 10-year government bond rose 1.5 basis point to 0.710% after the remarks, which market participants interpreted as signalling a strong chance that an unwinding of ultra-loose policy was imminent.

Under its massive stimulus programme, the BOJ currently guides short-term interest rates at minus 0.1%, caps the 10-year government bond yield around 0% and continues to buy huge amounts of assets such as government bonds.

Source: Investing.com