BOJ Hold Off Addressing JGB Volatility

Bank of Japan policy makers refrained from expanding their tools to address bond-market volatility, sticking with an April plan to double the monetary base as they seek to rekindle inflation and stoke growth.

BOJ Governor Haruhiko Kuroda and his fellow board members left unaltered the one-year fixed-rate loan facility the bank has tapped seven times amid a surge in 10-year government bond yields from a record low in April. Officials before the meeting were divided over whether to extend the loans to a two-year horizon, people familiar with the discussions said last week.

The yen advanced after today’s announcement, and stocks retreated, as investors assess whether Kuroda and Prime Minister Shinzo Abe’s initiatives to revive the world’s third-largest economy will prove effective. One concern at the BOJ is any return to an incremental strategy of responding to market turmoil that failed in the past, said Hiroshi Shiraishi, senior economist at BNP Paribas SA in Tokyo.


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