As aggressive U.S. interest rate hikes look like they might be nearing an end, Japan's central bank faces its own tricky decision this week over whether it should take another step towards phasing out its controversial yield control programme.
FILE PHOTO-Bank of Japan Governor Kazuo Ueda speaks at a group interview with media in Tokyo, Japan, May 25, 2023. REUTERS/Kim Kyung-Hoon/File PhotoBoard may debate minor tweak to YCC if cost seen exceeding meritGov Ueda expected to hold briefing 0630GMTlook like they might be nearing an end, Japan's central bank faces its own tricky decision this week over whether it should take another step towards phasing out its controversial yield control programme.
"The decision will depend on the balance between the benefits and cost," one of the sources said, a view echoed by another source. "The key is to ensure YCC is sustainable." There is no consensus within the board on how soon the BOJ should dial back stimulus. While one member called for an early tweak to YCC, others stressed the need to patiently maintain stimulus, according toThe BOJ may not afford to wait too long. Market liquidity remains thin due to the BOJ's heavy bond buying. Yen declines, driven by ultra-low Japanese rates, have pushed up import costs.
Former BOJ board member Takahide Kiuchi expects the central bank to eventually modify YCC, but stand pat on Friday.
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