In the minutes of April 27-28 meeting of BoJ indicated that while the board was concerned with fluctuation in Yen’s exchange rate, it remained firm on the stance to continue with ultra-loose monetary policy.

One board member noted that Japan’s economy was “still on its way to recovery”. As a “commodity importer”, the rise in commodity prices would “lead to an outflow of income from Japan and thus exert downward pressure on the economy.” Hence, it’s “necessary” to “continue with the current powerful monetary easing and thereby firmly support the economy.”

Another member noted that “the challenge of monetary policy in Japan was not to curb inflation, as in the case of the United States and Europe, but to overcome inflation that was still too low”. A different member commented that,” with the addition of Russia’s invasion of Ukraine to the existing downside risks to the economy, the situation had further changed significantly; against this backdrop, it was not appropriate for the Bank to make any big changes to its monetary policy stance.”

Regarding Yen’s depreciation, “a few members said excessive fluctuations in the foreign exchange market over a short period of time, such as those observed recently, would raise uncertainties about the future and make it more difficult for firms to formulate their business plans”.

Some member noted, “it was necessary for the Bank to clearly communicate to the public that the aim of monetary policy conduct was to fulfill its mandate of achieving price stability, rather than to control foreign exchange rates.”

Full minutes here.

Japan Prime Minister Fumio Kishida asked opposition DDP’s Yuichiro Tamaki on monetary policy. Tamaki said the BOJ must keep current ultra-low interest rates, arguing that tightening monetary policy was “unthinkable”. Kishida said afterwards, “I agree with you on the point that Japan shouldn’t alter monetary policy.”

Kishida also said, “monetary policy affects not just currency rates, but the economy and smaller firms’ businesses. Such factors must be taken into account comprehensively.”

Separately, Finance Minister Shunichi Suzuki said, “I’m concerned about the rapid yen weakening seen recently.” He added that the government will “closely liaise” with BoJ on watching the exchange markets with “even greater sense of urgency”. “We will respond appropriately if necessary while keeping close communication with currency authorities from other countries,” Suzuki said.

After a meeting with Japan Prime Minister Fumio Kishida, BoJ Governor Haruhiko Kuroda said “I told the prime minister that recent rapid yen moves were undesirable”.

“(Kishida) did not say anything special but I told him that it was important for currencies to move stably reflecting economic fundamentals,” he added. “I’ll fully watch currency movements carefully from now on as well and will appropriately respond to them while liaising with the government.”

BoJ offered to purchase unlimited amounts of 5- and 10-year JGBs today. That’s part of the central bank’s move to cap 10-year yield at 0.25%, after doubling down on maintaining this position and the overall ultra loose policy stance last Friday. Just last week, BoJ bought JPY 10.9T yen of government bonds, the most on record according to data compiled by Bloomberg.

BoJ’s move seems to be working well finally with 10-year JGB yield now down below 0.21% handle, after breaking above 0.27% later week.