By Leika Kihara
TOKYO (Reuters) -The Bank of Japan should discontinue purchases of risky assets such as exchange-traded funds (ETF) once sustainable achievement of its 2% inflation target comes into sight, one board member was quoted as saying at the central bank’s January meeting.
Another opinion called for the BOJ to end negative interest rates “at an appropriate timing,” as delaying the decision for too long could require subsequent interest rate hikes to be rapid, a summary of the meeting showed on Wednesday.
Under its massive stimulus programme, the BOJ guides short-term interest rates at -0.1% and the 10-year bond yield around 0%. It also buys government bonds and risky assets as part of efforts to reflate growth and achieve its 2% inflation target.
While several members called for maintaining ultra-loose monetary policy, other opinions highlighted a growing acknowledgement within the board that conditions for ending negative rates were falling into place.
“The BOJ is highly likely to reach a point where it can normalise monetary policy,” after assessing the impact of the earthquake that struck central Japan on Jan. 1 for “about the next one or two months,” one member said.
“Now is an important time to consider whether to adjust the degree of monetary easing from the current extremely powerful level,” another opinion said, stressing the need to discuss the fate of its bond yield control and negative rates, the summary showed.
(Reporting by Leika Kihara; Editing by Jacqueline Wong & Shri Navaratnam)
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