BOJ still ready to defend yield range ahead of the policy review – Bloomberg

The Bank of Japan (BOJ) officials are ready to defend the risk of Japan’s benchmark bond yield rising too much ahead of a policy review later this month, although the yields haven’t reached the 0.2% level, Bloomberg reports, citing people familiar with the matter.

Further details

“The BOJ has a loose movement range of around 0.2 percentage point on either side of its zero targets for the yield. While the current ceiling is intentionally vague, the bank wouldn’t allow the yield to hit 0.3% ahead of the review as that would raise doubts over the credibility of yield curve control.”

“While some bond fluctuations reflecting the recent global market shift in economic outlook are acceptable, the bank must keep the entire yield curve low and stable amid the pandemic.”

These comments come after the benchmark Japanese government bond (JGB) yield touched a five-year high of 0.175% on Friday.

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