Bank of Japan board member Takahide Kiuchi calls for monetary policy flexibility
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