The Bank of Japan will gradually build a case for a major overhaul of its stimulus framework in the second-half of next year, using the results of a review to support its move.
Gov. Kazuo Ueda is aware that the current ¡°yield curve control¡± stimulus framework is unsustainable, as it distorts prices, lacks flexibility, requires large purchases of government bonds and leaves the yen vulnerable to speculators, Taro Kimura of Bloomberg Economics wrote in a report Tuesday.
But from Ueda¡¯s experience as a board member who voted against a premature rate increase in the early 2000s, the governor is also wary of abandoning stimulus too quickly, Kimura wrote. He will instead use the review to support a case for ambitious change after a modest start at the helm, he said.
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