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BOJ must weigh benefits, costs of YCC - Amamiya
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Premature to debate exit policy - Amamiya
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Defends current stimulus as having reflated growth
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Amamiya seen as top contender to become next BOJ chief
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Govt to present BOJ nominees to parliament Feb. 14
(Adds quotes, context on Amamiya and BOJ policy)
By Leika Kihara
TOKYO, Feb 10 (Reuters) - Bank of Japan (BOJ) Deputy
Governor Masayoshi Amamiya, who is seen as a top contender to
become next central bank chief, said on Friday he saw no
imminent need to make further tweaks to its yield control
policy.
Speaking in parliament, Amamiya said he was mindful of the
demerits of yield curve control (YCC), such as distortions in
the yield curve caused by the BOJ's huge bond buying to defend
its 0.5% cap set for the 10-year bond yield.
"YCC is an extraordinary policy, so we must carefully
balance the benefits and costs," Amamiya said.
"For now, I don't see the need to make further steps to
enhance the flexibility of YCC," he added.
When asked by an opposition lawmaker whether tweaks to YCC
could become a future option, Amamiya said: "In general, our
basic approach is to guide monetary policy flexibly by weighing
the benefits and costs of each step."
Markets are rife with speculation the BOJ will phase out YCC
and raise interest rates under a successor to incumbent governor
Haruhiko Kuroda, whose second, five-year term ends in April.
Amamiya is considered by markets as among top contenders to
succeed Kuroda, though a government spokesperson denied a report
by the Nikkei newspaper on Monday that Prime Minister Fumio
Kishida's administration has sounded him out for the job.
The government will present its nominees for the new BOJ
governor and two deputies to parliament on Feb. 14, a ruling
party lawmaker told reporters on Friday.
Analysts see Amamiya as being more dovish on monetary policy
than other contenders like former deputy governors Hiroshi
Nakaso and Hirohide Yamaguchi.
In the parliament session, Amamiya defended the central
bank's ultra-loose policy as having successfully reflated
growth, and said it was "premature to debate any specific ideas
of an exit policy". He stressed the need to maintain current
stimulus to ensure inflation hits the BOJ's 2% target in a
sustainable manner.
The BOJ's leadership transition comes at a time Kuroda's
radical stimulus programme is being put to test by creeping
inflation - which hit 4% in December - and rising global
interest rates.
In a policy proposal last month, the International Monetary
Fund (IMF) urged the BOJ to let government bond yields move more
flexibly.
Under YCC, the BOJ guides short-term rates at -0.1% and the 10-year yield around 0%. It allows the 10-year yield to move 0.5 basis point up and down each around the 0% target, and also buys risky assets like ETFs as part of its stimulus programme. (Reporting by Leika Kihara; Editing by Jacqueline Wong & Shri Navaratnam)
Messaging: leika.kihara.reuters.com@reuters.net))