BOJ Still Far from 2 Pct Inflation 5 Yrs after Novel Measure

Politics

Tokyo, Sept. 20 (Jiji Press)--The Bank of Japan is still far from attaining its 2 pct inflation target five years after introducing the novel measure of guiding long-term interest rates to around zero pct.

The BOJ "can proceed with more powerful monetary easing by controlling the yield curve," its governor, Haruhiko Kuroda, said in a speech soon after the central bank decided to introduce the measure called yield curve control Sept. 21, 2016.

With the yield curve control, the BOJ guides short-term interest rates to around minus 0.1 pct and 10-year Japanese government bond yields to around zero pct.

It is an unusual measure for a central bank because it is aimed at directly affecting long-term interest rates. In a market economy country, long-term rates are left to move freely reflecting market views on the economy and other factors.

The BOJ took the measure after Kuroda failed in his plan to achieve 2 pct inflation within two years through the so-called quantitative and qualitative monetary easing policy, adopted in April 2013 just after he became the BOJ's head.

[Copyright The Jiji Press, Ltd.]

Jiji Press