TOKYO (Reuters) - Bank of Japan policymakers discussed buying longer-dated government bonds as a policy option, minutes of the bank’s January rate review showed, suggesting that such a move could be their preferred next step in expanding stimulus further.
Under its asset-buying program, the BOJ buys government bonds with up to three years until maturity, as well as other assets such as corporate debt, to pump money into the economy.
A few members of the nine-member board said one option could be to extend the duration of government bonds purchased to around five years, the minutes showed on Tuesday, a move that would help push down the longer end of the yield curve.
No formal proposal was made at the meeting, but the fact it was floated as an option suggests it could emerge as the next step when the central bank eases monetary policy again.
At the January 21-22 meeting, the BOJ doubled its inflation target to 2 percent and made an open-ended pledge to buy assets from next year, responding to intense pressure from new Prime Minister Shinzo Abe to take bolder action to beat deflation.
The increase in the inflation target was opposed by board members Takehiro Sato and Takahide Kiuchi because they felt it far exceeded levels deemed sustainable in Japan, which has been mired in grinding deflation for much of the past two decades.
“Even if the central bank were to set 2 percent inflation as a target, this alone was highly unlikely to have a substantial influence on inflation expectations,” they were quoted as saying in the minutes.
One board member suggested beginning open-ended bond purchases immediately, but did not formally propose it as others preferred to start next year, the minutes showed.
At a subsequent meeting in February, the BOJ kept monetary policy steady and revised up its assessment of the economy as the yen’s recent declines and signs of a pick-up in global demand supported exports.
Reporting by Leika Kihara; Editing by Edmund Klamann and John Mair