TOKYO, Jan 23 (Reuters) – Government officials attending the Bank of Japan’s monetary policy meeting in December were given a half-hour reprieve to contact their ministries, minutes showed, underscoring the importance of the central bank’s decision to adjust its parity in the bond market.
In it Dec. 19-20 meetingThe BOJ maintained its ultra-easy monetary policy but surprised markets with a surprise change in its YCC policy that allowed long-term interest rates to rise.
Before the nine-member board voted on the steps, government representatives requested that the meeting be suspended for about 30 minutes, the minutes were shown Monday.
Governor Haruhiko Kuroda approved the request as chairman of the BOJ meeting, according to the minutes.
“The government understands that the matters discussed today were aimed at carrying out monetary easing in a more sustainable manner with a view to achieving the BOJ’s target price,” said a Ministry of Finance (MOF) official who attended the meeting, referring to the central bank. The bank’s inflation target.
Another government representative, who was from the Cabinet Office, urged the BOJ to watch the consequences of rising inflation, supply constraints and market volatility on Japan’s economy, the minutes show.
The two representatives did not express opposition to the yield control adjustment or any other element of the BOJ’s discussion, the minutes showed.
Two government representatives, one from the MOF and one from the Cabinet Office, have the legal right to attend BOJ policy meetings and express the government’s views on policy decisions, although they cannot cast votes.
At a press conference on Monday, Finance Minister Shunichi Suzuki said the MOF representative had briefed him on the expected BOJ decision during the postponement.
It is rare for government representatives to request adjournment of BOJ meetings, which only happens at times of key decisions, such as a change in monetary policy.
For example, the government was granted a reprieve during a meeting when the BOJ introduced negative interest rates in January 2016, according to the minutes of that meeting.
Under YCC, the BOJ sets the short-term interest rate at -0.1% and the 10-year bond rate at around 0% with a small tolerance band.
At the December meeting, the band set around the 10-year yield target was doubled to 0.5 percentage points up and 0.5 percentage points down, a move aimed at removing market distortions caused by the strong BOJ purchase of bonds.
Reporting by Leika Kihara; Edited by Bradley Perrett and Jacqueline Wong
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