One BOJ Policymaker Called for Higher yield Target at December Meeting

The Bank of Japan should be flexible about raising its bond yield target and allow long-term interest rates to increase if such moves reflected improvements in the economy, one of its board members was quoted as saying at this month's rate review. 

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"I am opposed to setting the 10-year bond yield target around zero percent, and believe the yield curve should be allowed to steepen a bit more," the board member said, according to a summary of opinions at the Dec. 19-20 meeting released on Thursday. 

The views are likely those of former market economist Takehiro Sato, who dissented to the BOJ's decision to maintain the 10-year bond yield target around zero percent. While his views are a minority, it highlights a rift within the nine-member board on the feasibility of the new policy framework that requires the BOJ to ramp up bond buying if market pressures push up yields above its target. 

At the December meeting, several board members argued that the BOJ should keep its yield targets at current levels for the time being to avoid withdrawing stimulus prematurely, according to the summary of views.