2023-10-31 13:40:39
© Reuters. A pedestrian walks in front of the Bank of Japan headquarters in Tokyo 05/22/2020 REUTERS/Kim Kyung-hoon
Por Leika Kihara e Tetsushi Kajimoto
TOKYO (Reuters) – The Bank of Japan further loosened its grip on long-term interest rates by again adjusting its bond yield control policy on Tuesday, taking another small step towards dismantling its controversial stimulus currency of the last decade.
While keeping ultra-low interest rates unchanged, the central bank eased its 1% cap on 10-year bond yields, which it had set just three months ago, to allow long-term borrowing costs to rise further.
The bank’s nine-member board also revised upward its price forecasts to project that inflation will far exceed its 2% target this year and next, underscoring a growing conviction that the conditions for phasing out its super-loose monetary policies are falling into place.
But the figure fell compared to after the decision, as investors focused on the central bank’s promise to “patiently” maintain accommodative monetary policy and the forecast that inflation would return to below 2% in 2025.
“We have not yet seen enough evidence to feel confident that inflation trend (will reach 2% sustainably),” central bank governor Kazuo Ueda said at a news conference following the decision. “That way, we don’t see a big risk of being behind the curve.”
As widely expected, the Bank of Japan maintained its target of -0.1% for short-term interest rates and its target for ten-year government bond yields at around 0%, set under yield curve control. fees.
But it redefined the 1% cap on the 10-year yield as a soft “upper limit” rather than a hard cap, and withdrew its pledge to defend the level with offers to buy an unlimited amount of bonds.
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