Bank of Japan board member Takahide Kiuchi said that the BOJ needs to increase flexibility of the current policy commitment of achieving the 2% price stability target. Kiuchi proposed a ‘medium to long-term’ aim to achieve the 2% goal, and to limit quantitative and qualitative monetary easing to about two years in a recetn BOJ policy board meeting. He was voted 8-1 against.
- “If the current easy policy is prolonged or the BOJ conducts additional aggressive easy policy” than adverse effects could be bigger than the positive effects
- He is quoted from an interview publised in the weeklt magazine, ‘Diamond’ (Japanese business magazine)
- current policy commitment intensified instability in Japanese government bond markets
- an increase in JGB volatility will put upward pressure on interest rates through a rise in risk premium