(Japan Times) –The Bank of Japan (BOJ) is working to communicate better with the public and investors just months after markets were gripped by turmoil blamed in part on poor monetary-policy signaling.
“There is no silver bullet in better communication. Each approach comes with pros and cons, and I would say that there is no clear consensus yet among board members about which approaches to pursue,” BOJ Deputy Gov. Ryozo Himino said during a speech at a conference hosted by Bloomberg in Tokyo on Thursday.
“After the August market turmoil, many commentators argued that the bank should have had better communication with market participants.”
BOJ communications with the markets have been criticized in recent months.
After a surprise rate increase on July 31, Japanese stocks plummeted into bear-market territory, with the benchmark 225-issue Nikkei average falling 12.4% — the second-largest decline ever — on Aug. 5 alone.
Japan’s currency strengthened dramatically, and stocks across the globe became volatile.
The BOJ’s big move, in which the short-term policy-rate target was taken to 0.25% from a range of zero percent to 0.1%, was a shock to some investors because the central bank had done little to signal a tightening of that magnitude.
The bank also flubbed the actual announcement, with the rate-decision webpage crashing just as traders and investors were seeking to access the information.
This added to the sense of uncertainty.
BOJ Gov. Kazuo Ueda told a parliamentary session after the market turmoil that the central bank would endeavor to do a better job of explaining its views.
On Thursday, Himino reiterated that message.
“I can testify that there is a strong will among us to learn from what happened,” he said, delivering his comments in English.
During the talk, Himino noted the BOJ’s intention of raising rates and otherwise adjusting monetary policy if key economic data and prices are in line with its forecasts.
Himino touched on a meeting between Ueda and Prime Minister Shigeru Ishiba last week, during which the governor told the prime minister that monetary policy will continue to be accommodative and suggested that the BOJ is in no rush to raise rates.
Markets are closely watching BOJ rate moves, as Ishiba’s views on monetary policy remain uncertain.
Before winning the ruling Liberal Democratic Party’s leadership race last month, he said the BOJ’s policy direction, which calls for increasing rates if the data is in line with forecasts, was appropriate.
Ishiba flip-flopped after becoming prime minister, saying that he does not believe now is the time to introduce another rate increase.
His shift to what is seen as a dovish stance has restored some calm to the markets, while the yen has weakened slightly.
Japan is holding a general election on Oct. 27, and troubles in the market could be exploited by the opposition to gain seats.
The BOJ is independent, but some analysts, traders, and investors believe the views of politicians influence monetary policy decisions.
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