TOKYO - The Bank of Japan may seek to prevent unwelcome yen rises by tolerating temporary, market-driven falls in long-term interest rates, former BOJ board member Sayuri Shirai said on Friday.
Cutting the BOJ’s rate targets or widening the band in which 10-year yields are allowed to move would be too controversial, as doing so could push yields deeper into negative territory and strain financial institutions’ profits, Shirai said. “That way, it can head off excessive rises in the yen, without hurting financial institutions,” she told Reuters.
If yen rises become too sharp, the BOJ may be forced to widen the range at which it allows yields to move, said Shirai, who retains close contact with central bank policymakers.
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