Bank of Japan relaxes bond yield margin to 1 %
The BoJ, through the Policy Council, decided this Tuesday to make the bond yield margin more flexible to 1 % and raise its inflation forecast
The Policy Council of the Bank of Japan (BoJ) decided this Tuesday to maintain its ultra-loose monetary stance, with the reference interest rate at -0.1 %, although it has announced that it will increase flexibility in controlling the yield curve. bond yields, at the same time that it has raised its inflation forecast for 2023 to 2.8 %, compared to the 2.5 % anticipated last July.
With its decision this Tuesday, the institution led by Kazuo Ueda has unanimously agreed to maintain the reference interest rate at -0.1%, the same rate it has been applying since January 2016, when it entered negative territory for the first time in its history.
Likewise, the Japanese central bank has decided to continue purchasing the necessary amount of Japanese Government Bonds (JGB) without establishing an upper limit so that the yields of the 10-year Japanese public debt remain around zero percent.
However, it has announced that it will increase the flexibility of its public debt yield curve control policy, setting the upper limit of 1 % for the yield of Japan’s 10-year bond as a “reference in its market operations.”
In this way, the institution will continue to purchase Japanese sovereign bonds with maturity of 10 years on a “large scale” and “agile” market operations to continue “patiently” with monetary easing.
Increase in inflation forecasts
On the other hand, the Bank of Japan has revised upward the expected inflation for 2023 to 2.8 %, compared to the 2.5 % projected last July.
Looking ahead to next year, the entity expects prices to rise by 2.8 %, nine tenths more than previously anticipated, while for 2025 it has raised its forecast by one tenth, to 1.7 %.
The institution has assured that it will continue with the monetary policy of quantitative and qualitative easing (QQE) with yield curve control with the objective of achieving its inflation objective, set at 2 %.
Source: dpa
(Referential image source: David Edelstein, Unsplash)
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