BOJ Will Look Into Media Report Foreshadowing Negative Rates

  • Kuroda questioned in Parliament about market-moving report
  • Other central banks have had issues managing information

The Bank of Japan will look into a media report that said the BOJ board was discussing a negative interest rate policy just minutes before it surprised observers with the announcement.

QuickTake Negative Interest Rates

BOJ Governor Haruhiko Kuroda told Parliament on Wednesday that the central bank wants to determine if the story was speculation or whether somebody passed on information from the policy meeting to the reporter. Finance Minister Taro Aso said he hopes there was no ethical breach and that the government will wait for the results of the BOJ inquiry.

The report by Japan’s Nikkei news service came while Kuroda and the board were in the closing stages of a two-day policy meeting.

It sparked sharp moves in the yen and the Japanese stock market before the policy statement was released at 12:38 p.m. in Tokyo on Jan. 29. Markets then zigzagged throughout the afternoon as investors digested the news.

Report’s Content

The Nikkei report said that negative rates were being discussed due to growing concern about downward pressure on Japan’s economy and inflation because of low oil prices and the slowdown in China. The report didn’t identify the source of the information.

A Nikkei spokeswoman declined to answer questions over the phone, requesting that they be submitted by fax.

The board meeting ended at 12:31 p.m. , according to the BOJ. In addition to Kuroda and his eight board colleagues, two government representatives and about a dozen BOJ staff members usually attend the meetings.

Once a decision has been made, statements are printed for journalists who are allowed to look at them in a closed room with no outside communication until the BOJ makes the decision public. Reporters inside that room had the information for less than 10 minutes before its release on Jan. 29.

‘Huge Problem’

Takahiro Sekido, a former BOJ official and now a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd., said that if there was a leak, it’s “a huge problem.”

If the central bank fails to control inside information properly, there is a risk that investors start looking to the media and not the BOJ itself for cues, said Daiju Aoki, a Japan economist at UBS Group AG.

Other central banks have had issues with managing confidential information.

The U.S. Federal Reserve issued guidelines for policy makers in July 2011, calling for them to to refrain from characterizing the views of other FOMC members and from publicly discussing the contents of meetings beyond what’s published in minutes of the closed-door sessions.

Policy details leaked out to Medley Global Advisors in October 2012 and are now the subject of at least two different probes -- one by Congress, and a joint criminal investigation conducted by the Fed’s inspector general and the U.S. Attorney.

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