Bank of Japan Governor, Kazuo Ueda, clarified that the recent adjustment to the bank’s yield curve control policy does not indicate a change in the bank’s easy monetary policy stance. The aim behind this move is to enhance the flexibility of the yield curve control policy, thus increasing the likelihood of achieving the 2% inflation target while ensuring the long-term sustainability of the framework.
The Bank of Japan announced on Friday that it would now treat the 0.5% cap on the 10-year Japanese government bond yield as a suggestion rather than an inflexible limit. Additionally, it disclosed its plan to purchase JGBs (Japanese government bonds) at a 1% yield every business day, effectively setting a new hard cap for the 10-year yield at 1%.
Governor Ueda highlighted that this decision empowers the JGB market to have greater autonomy in determining the 10-year yield. However, he emphasized that the bank will maintain control over the market to prevent speculative selling of JGBs from becoming excessively dominant.
Write to Megumi Fujikawa