BoJ’s Kataoka counters hawkish remarks with calls for more easing

While the market has not yet digested the recent hawkish commentaries from the Bank of Japan (BoJ) policymakers like Governor Kuroda and board member Suzuki, another board member Goushi Kataoka countered that hawkish rhetoric by calling for more easing. Speaking with Mainichi news agency last week, BoJ board member Hitoshi Suzuki suggested that negative interest rates and yield curve control to keep the 10-year yield close to zero might be hurting the country’s financial institutions and that might hamper effective implementation of monetary policies, however, board member Kataoka countered those views by suggesting that the central bank must expand stimulus further to achieve its price target easily, so that the prolonged monetary easing doesn’t hurt the country’s banking system. Kataoka, the sole dissenter to last month’s decision to keep monetary policy steady, said it was premature to debate an exit strategy from its massive stimulus program. Kataoka dissented to the decisions in September and October to keep policy steady. In October, he also called for adopting steps to push down 15-year bond yields to below 0.2 percent.

Despite almost 5-years of monetary easing and despite Bank of Japan’s (BoJ) balance sheet approaching 100 percent of the GDP, inflation remains low at just 0.7 percent.