BOJ Adjusts Yield Control Policy, Expands Flexibility
The Bank of Japan (BOJ) has made adjustments to its bond yield control policy, signaling a gradual move towards ending its massive stimulus program. While maintaining its short-term interest rate target of -0.1% and the 10-year government bond yield target of around 0%, the BOJ redefined 1.0% as a loose "upper bound" rather than a rigid cap and removed a pledge to defend the level with unlimited bond purchases. The decision reflects the challenges faced by the BOJ in maintaining its bond yield control amid rising global bond yields and persistent inflation. The BOJ also revised up its inflation forecasts, indicating a growing conviction that conditions for phasing out ultra-loose monetary policy are falling into place.