A few Bank of Japan board members voiced concern over a possible worsening of market functioning, although some improvements were observed as of September 21-22 policy-setting meeting, the minutes released Monday showed.

According to those members, a recent survey showed "market functioning remained deteriorated, although some improvements had been observed, partly as a result of the BOJ allowing greater flexibility in the conduct of yield curve control”.

Low liquidity was certainly still a concern, along with market functioning risks even after the greater flexibility of the YCC tweaks, the minutes noted as comments from various members. Most members saw long-term interest rates as "relatively stable and there was no need for an additional revision to the conduct of yield curve control.”

However, although not subject of the latest minutes, policymakers in October decided to increase the flexibility of YCC, by discarding any explicit ceiling for 10-year bond yield. The BOJ has set 1% as a new referent rate for 10-year bond yield.