BOJ leaning towards keeping yield control steady next week - sources
By Leika Kihara and Takahiko Wada
TOKYO (Reuters) -The Bank of Japan is leaning towards keeping its yield control policy unchanged at next week's meeting, five sources familiar with its thinking said, as policymakers prefer to scrutinise more data to ensure wages and inflation keep rising.
But there is no consensus within the central bank on how soon it should start phasing out stimulus, which could make next week's decision a close call.
With inflation having exceeded the BOJ's target for more than a year, markets have been simmering with speculation the central bank could tweak yield curve control (YCC) as early as the July 27-28 meeting.
Some market players bet the central bank could widen the allowance band set around its yield target to arrest market distortions caused by its heavy bond buying.
With the 10-year yield moving stably below the 0.5% yield cap, however, many BOJ policymakers see no imminent need to take fresh steps against the side-effects of YCC, the sources said.
They also believe the BOJ can afford to wait until there is more clarity on whether the global economy can avert a hard landing and allow Japanese firms to earn enough profits to keep hiking wages next year, they said.
Notwithstanding abrupt moves in the bonds and yen, the BOJ is likely to make no changes to its policy framework next week, they said.
«Inflation is accelerating more than expected. But the key is whether the increase is sustainable, which will depend largely on corporate profits and next year's wage outlook,» one of the sources said.
«YCC needs to end at some point. But the timing is probably not now,» said another source. «There are signs of change in Japan's deflationary mindset. But it's still sentiment-driven rather than
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