At the monetary policy decision meeting held by the Bank of Japan in October, it was found that policy committee members pointed out that there was a risk that policy changes would hinder a virtuous cycle between prices and wages.
However, at the meeting on the 20th of this month, the Bank of Japan has decided to revise its monetary easing measures, and it seems likely that a careful explanation will be required of the reasons for the revision.
According to the minutes of the meeting, all Policy Board members shared the recognition that the movement of JGB yields was in line with the BOJ's policy through various ingenuity in money market operations.
A member of the Policy Board also pointed out the side effects of monetary easing, saying, "The fact that long-term interest rates are stuck at the upper limit of their fluctuation range can have a negative impact on market functioning." He also expressed the view that staying at the same level would have great benefits for the economy.
A number of members expressed the view that "since halfway policy changes run the risk of impeding a virtuous cycle of prices and wages, it is necessary to take the time to implement monetary easing tenaciously." decided to maintain large-scale monetary easing.
However, at the meeting held on the 20th of this month, the Bank of Japan unanimously decided to revise its monetary easing measures and raise the upper limit of the fluctuation range of long-term interest rates to about 0.5%.
The Bank of Japan has said that this revision is not a monetary tightening, but the market has pointed out that it overturned the explanation so far, and it seems that a careful explanation of the reasons for the revision will be required.