BoJ Deputy Governor Masayoshi Amamiya said in a speech, “with the economy hit by the impact of COVID-19, what is important now is to maintain the stability in the bond market and stabilize the entire yield curve at a low level.”
“in conducting yield curve control in a sustainable manner, it is important to strike an appropriate balance between maintaining market functioning and controlling interest rates”, he added. BoJ can “find more ways to achieve this balance… although significant fluctuations in interest rates could lead to undesirable consequences, fluctuations within a certain range could have positive effects on the functioning of JGB markets without losing the effects of monetary easing.”
He admitted that because of the possible negative impact, one view in the market is that the Bank finds it difficult to further cut short- and long-term interest rates.” But he emphasized ” it is appropriate to ensure that the Bank can cut them with consideration for the impact on the functioning of financial intermediation.”
“Sharing this recognition with market participants and various economic entities will further enhance the effectiveness of a cut in short- and long-term interest rates as an option for additional easing.”
