BOJ drops more hints of bigger yield moves

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    TOKYO- Bank of Japan policymakers discussed the merits of allowing long-term yields to move more flexibly around the bank’s target, a summary of opinions at their January meeting showed, a sign the idea will be a key element of its policy review in March.

    As the coronavirus pandemic forces it to maintain a massive stimulus program for a prolonged period, the BOJ plans to announce in March ways to make its tools more sustainable.

    “With our monetary easing steps to be prolonged, allowing the 10-year government bond yield to move upward and downward to some extent … will contribute to financial system stability,” said one member, according to the summary released on Friday.

    Allowing 10-year yields to move more widely likely won’t hurt the economy much, because most money raised by households and companies aren’t directly affected by long-term rate moves, another opinion quoted in the summary showed.

    The comments are the strongest hints to date that the BOJ will allow long-term rates to deviate further from its 0 percent target in its March policy review.