March 30, 2018 / 3:20 AM / 23 days ago

BOJ's Amamiya repudiates view central bank is tapering stimulus

TOKYO (Reuters) - Bank of Japan Deputy Governor Masayoshi Amamiya on Friday rejected market views that the central bank was tapering its bond purchases and seeking to exit its ultra-easy policy.

FILE PHOTO: Bank of Japan (BOJ) Deputy Governor Masayoshi Amamiya at the BOJ headquarters in Tokyo, Japan, March 20, 2018. REUTERS/Toru Hanai

After shifting to a policy targeting interest rates from the pace of money printing, the BOJ no longer commits to a set pace of bond purchases but loosely pledges to increase its holdings at an annual pace of roughly 80 trillion yen ($752.52 billion).

Some analysts have said the central bank is embarking on “stealth tapering” as actual purchases have slowed to around 50 trillion yen, partly because it needs to buy fewer bonds to keep yields low given its dominant presence in the market.

“The BOJ’s bond-buying pace fluctuates from time to time depending on market moves,” Amamiya told parliament.

“That is completely different from the U.S. Federal Reserve’s tapering, which is an intentional, steady slowdown (of asset purchases) aimed at normalising monetary policy,” he said.

BOJ Executive Director Eiji Maeda told a separate parliament committee the central bank had no current plan to dial back its massive stimulus programme as inflation remains distant from its 2 percent target.

“We’re not in a stage where we need to consider the timing or means to change our current policy framework, including negative interest rates,” Maeda said.

“It’s important to patiently pursue powerful monetary easing.”

In the last few months market speculation has run high that the BOJ was preparing to scale back its stimulus sooner rather than later, partly triggered by the changing scale of the central bank’s bond-buying activity.

But BOJ Governor Haruhiko Kuroda has stressed the Japanese central bank was in no rush to follow in the footsteps of its major peers in exiting crisis-mode policy that was set in motion five years ago.

Under a policy dubbed yield curve control, the BOJ pledges to guide short-term interest rates at minus 0.1 percent and the 10-year government bond yield around zero percent.

($1 = 106.3100 yen)

Reporting by Leika Kihara; Editing by Chris Gallagher & Shri Navaratnam

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