Financial News: BoJ Re-defines 10-Year JGB Yield Cap

BoJ Re-defines 10-Year JGB Yield Cap

(RTTNews) - The Bank of Japan decided to bring more flexibility to its yield curve control policy and left its short-term interest rates unchanged on Tuesday.

The policy board led by Governor Kazuo Ueda, decided to regard the upper bound of 1.0 percent for 10-year JGB yields as a reference in its market operations.

The bank dropped the wording that the 10-year JGB yields will fluctuate between plus and minus 0.5 percentage points from the target level.

The BoJ board decided to retain a negative interest rate of 0.1 percent on current accounts that financial institutions maintain at the central bank.

The board will also continue to purchase necessary amount of JGBs without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

The policy announcement indicates that the Yield Curve Control is now de facto over, but it remains to be seen how rapidly the Bank will slow its bond purchases, Capital Economics' economist Marcel Thieliant said.

The bank today raised its inflation outlook for both the fiscal 2023 and 2024. The projection for the fiscal 2023 was lifted to 2.8 percent from 2.5 percent and that for 2024 was raised to 2.8 percent from 1.9 percent.

Inflation in the fiscal 2025 was estimated at 1.7 percent, up from 1.6 percent projected in July.

The BoJ has lifted the growth outlook for the fiscal 2023 to 2.0 percent from 1.3 percent, while the forecast for 2024 was downgraded to 1.0 percent from 1.2 percent. The projection for 2025 was retained at 1.0 percent.

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