Former Japanese Finance Official: "BOJ Expected to Maintain Easing Policy This Month... YCC Revision in Autumn"

Former Japanese Treasury Official Predicts Timing of Policy Revision
Bond Market Still Faces No Major Difficulties
Even with YCC Adjustment, Yen Strength Remains Unlikely

Experts predict that the Bank of Japan (BOJ) will maintain its current monetary policy at the policy meeting scheduled for the 24th. The expected timing for BOJ's policy adjustment is forecasted to be in September or October.

Mitsuhiro Furusawa, Former BOJ Treasurer

Mitsuhiro Furusawa, former Vice Minister of Finance, told Bloomberg on the 21st, "I previously thought a policy adjustment might be possible this month, but considering Governor Ueda's remarks, the likelihood of the BOJ modifying its Yield Curve Control (YCC) policy at next week's meeting is low."

Earlier, BOJ Governor Kazuo Ueda emphasized in a press conference following the conclusion of the G20 Finance Ministers and Central Bank Governors meeting on the 18th, "We will persistently continue monetary easing while considering the financial intermediation function and market function until a sustained and stable 2% inflation rate is achieved."

Furusawa added, "Contrary to market concerns, the YCC policy has not caused noticeable distortions in the bond market or significant difficulties in bond issuance." However, he noted, "Since the YCC policy acts very irregularly on financial markets, the BOJ needs to review it." The YCC policy, which artificially caps long-term interest rate fluctuations, is causing stress in the market.

He further identified September and October of this year as the likely periods when the BOJ might adjust its policy. He forecasted that the monetary policy of maintaining the benchmark interest rate in negative territory will remain unchanged at least until next year.

However, he observed that even if the BOJ adjusts the YCC policy, the possibility of the yen entering a strong phase is low. The YCC policy is merely a tool for monetary easing and does not significantly impact Japan's economic fundamentals.

He explained, "The yen's value will decline to below 145 yen, showing weakness," but added, "Since the US interest rate hikes have peaked and Japan is expected to review its monetary policy soon, the situation will differ from last year when the yen surged to the 150 yen level."

Meanwhile, as of 10:12 a.m. today in the Tokyo foreign exchange market, the yen was trading at 140.05 per US dollar. After falling to the 130 yen level earlier this month, the yen exchange rate surpassed the 140 yen level again amid growing expectations that the US will raise its benchmark interest rate.

This content was produced with the assistance of AI translation services.