TOKYO (AFX-ASIA) - Bank of Japan governor Masaru Hayami said he believes that there is no need to increase outright purchases of long-term government bonds to secure ample liquidity in the money market.
"I believe at the moment there is no urgent necessity to increase outright purchases of long-term bonds because there are other ways to secure liquidity," he told reporters after a Cabinet meeting on the monthly economic assessment.
He was responding to a question on whether the bank will consider shifting to long-term bond purchases from recent activity at the short-end of the yield curve in its daily money market operations. The Bank of Japan said yesterday that it would carry out outright purchases of treasury bills worth 500 bln yen to maintain its outstanding current account balance at 5 trln yen.
The decision came a day after the failure to inject necessary funds into the system through treasury bill sales operations with repurchase agreements.
The bank attempted to inject some 600 bln yen into the market but was able to supply only 234.1 bln yen due to financial institutions' unwillingness to accept the repurchase agreements.
"If one approach does not work fine, we will use other options available, to fulfill the commitment," a BoJ official said at the time. "But this does not mean that we will immediately increase outright purchases of long-term government bonds."
Meanwhile, Hayami added that he was asked by Prime Minister Junichiro Koizumi, during their first meeting since the premier came to power, to stay on as central bank governor.
Domestic reports recently speculated that Hayami would resign. "Prime Minister Koizumi urged me to stay in office and to keep an eye on my health," Hayami said. "So I replied that I will do my best in the job."