TOKYO -- The Bank of Japan reduced the growth rate in the monetary base last year to the lowest level since undertaking an ultraloose policy in 2013.
The monetary base totaled 504 trillion yen ($4.66 trillion at current rates) at the end of December, up 24 trillion yen from a year earlier for the weakest 12-month gain since Gov. Haruhiko Kuroda enacted the quantitative and qualitative easing programs.
The BOJ's ultraloose policy produced annual gains in Japan's monetary base of up to 80 trillion yen for the months between 2014 and 2016, but the pace has slackened to less than one-third of that.
The central bank pivoted to a rate-focused policy in fall 2016, aiming to guide the benchmark 10-year JGB yield to around zero. At the same time, the bank has pumped the brake on quantitative easing. As of the end of December, the BOJ expanded its holdings of long-dated JGBs by just over 37 trillion yen on the year, an increase that is less than half the peak.
The BOJ has given greater consideration to the negative effects of its ultraloose monetary policy. The central bank owns nearly half the JGBs issued, which has muted trading in the domestic bond market. The historically low JGB yields also have hurt earnings at financial groups.
Meanwhile, the bank's 2% inflation rate target remains elusive.
"In order to strengthen the sustainability and durability of a muscular monetary easing policy, it is also necessary to monitor the policy's side effects," Kuroda said.