TOKYO, July 17 Some Bank of Japan board members
proposed offering longer-dated fixed-rate funds in its market
operations to curb excessive interest rate fluctuations, minutes
of the central bank's June policy-setting meeting showed on
Wednesday, but others said the measure could be misinterpreted
as a change in the BOJ's monetary policy framework.
The members concluded that flexible operations under the
BOJ's current framework would be enough to stabilise interest
rates, deciding against putting the proposal to a formal vote.
The BOJ left monetary policy unchanged at the June 10-11
meeting as widely expected, maintaining its pledge to expand the
supply of money at an annual pace of 60 trillion to 70 trillion
yen ($604-705 billion) to achieve its 2 percent inflation target
in two years.
At the meeting, held after weeks of bond market turbulence,
the nine-member board discussed the idea of extending the
maximum duration of cheap, fixed-rate funds offered by the BOJ
in market operations to two years from the current one year.
Such a move would have made it easier for banks that were
caught wrong-footed by the spike in bond yields in late May to
hedge their portfolios by reducing the need to sell bonds to
balance their books, potentially dampening market swings.