Bank of Japan members saw no need for new yield control tweaks, September minutes show

Most Bank of Japan board members saw no need for additional tweaks to yield curve control and agreed to continued monetary easing to meet inflation and wage growth objectives, minutes of its September meeting showed on Monday.

The comments were made before the BOJ's October meeting last week, at which it further loosened its grip on long-term interest rates by tweaking its bond yield control, taking another small step towards dismantling its controversial monetary stimulus.

At the Sept. 21-22 meeting, the BOJ stuck to its easy money settings and its pledge to support the economy until inflation sustainably hits its 2 per cent target, suggesting it was in no rush to phase out its massive stimulus programme.

Board members shared the view that long term interest rates were moving in line with its market operation policy following the central bank's decision in July to make yield control more flexible, the minutes from the September meeting said.

"At that time, U.S. long term rates had not yet shot up so the minutes suggested that the measures the BOJ adopted last week were not expected until recently," said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities.

At the September meeting, the BOJ turned positive about its view on price growth, although central bank board members remained cautious about policy tweaks, Muguruma added.

Several members said abolishing a negative rate and yield control policy would have to be discussed together with any successful achievement of the BOJ's 2 per cent inflation target.