Kazuo Momma is a recent ex-Bank of Japan official, was the executive director in charge of monetary policy, and is now a senior economist at Mizuho Research & Technologies.

He says Bank of Japan board members will likely discuss whether to tweak forward guidance along with the yield curve control mechanism when they meet next, October 30 and 31.

  • “Japan’s long-term yields have already risen to 0.8%,”
  • “Even if it’s not stuck at the ceiling of 1%, it will be a topic of discussion whether the current ceiling would be reasonable if there’s more upward pressure going forward.”

Momma outlined options the bank is likely to discuss:

  • could raise the rate for its daily fixed rate operation from 1%
  • or lift its target rate for 10-year bond yields to 0.25%
  • could push the upper limit higher

“There won’t be an end to the negative rate and YCC in October, as they are linked to the 2% inflation target that hasn’t been achieved”