New BoJ board member calls for policy review 'at the right time'

One of the Bank of Japan's newest governing board members believed that the central bank should review its policy framework.

In an interview with Bloomberg, the first since joining the BoJ's board in July, Naoki Tamura, reportedly reportedly said that: "It would be appropriate to conduct a review at the right time, including the monetary policy framework and inflation target.

"That moment could arrive soon, or be a little later."

At present, the BoJ's main policy target was to keep the yield on the benchmark 10-year Japanese government bond at 10.0%.

Some analysts at least had for some time already been anticipating that possibility, coinciding with current BoJ Governor, Haruhiko Kuroda's, scheduled departure from the post next April.

Nevertheless, for now they considered a change in policy unlikely, although they believed that the question of who exactly replaced Kuroda, would be key to that outcome.

Tamura was careful to be non-committal on the result of any review.

However, unlike Kuroda, he reportedly spied the possibility of an upside surprise to inflation, which at present the BoJ was expecting would decline to below 2% from next fiscal year, which began in April 2023.

Given ongoing concerns around bond market functioning and reduced liquidity, Tamura said that an exit strategy, options for the same or preliminary direction would need to be communicated at the "right time".

"It's important to get market participants to think about how they’ll respond, and prepare."