Japan Provides Flexible Bandwidth For Government Bond Yields To Fluctuate

<h4>Japan Provides Flexible Bandwidth For Government Bond Yields To Fluctuate<&sol;h4>&NewLine;<p><strong><a href&equals;"https&colon;&sol;&sol;openlife&period;ng&sol;">OpenLife Nigeria<&sol;a><&sol;strong> reports that the Bank of Japan unexpectedly tweaked its monetary policy framework on Friday&comma; providing more flexible bandwidth for government bond yields to fluctuate&period;<&sol;p>&NewLine;<p>The nine-member board&&num;8217&semi;s decision &&num;8211&semi; an 8-1 majority vote &&num;8212&semi; will allow 10-year Japanese government bond yields to rise above the current cap of 0&period;5&percnt;&period;<&sol;p>&NewLine;<p>While it maintained its policy of guiding yields 50 basis points above or below 0&percnt;&comma; it added new wording in a statement&comma; saying &&num;8220&semi;it will conduct yield curve control with greater flexibility&comma; regarding the upper and lower bounds of the range as references&comma; not as rigid limits&comma; in its market operations&period;&&num;8221&semi;<&sol;p>&NewLine;<p>&&num;8220&semi;The Bank will offer to purchase 10-year JGBs at 1&period;0 percent every business day through fixed rate operations&comma; unless it is highly likely that no bids will be submitted&comma;&&num;8221&semi; the statement said&period;<&sol;p>&NewLine;<p>The market turned volatile after the announcement&comma; as it digests the impact of the policy tweak&period; Japanese yen rose to 138&period;64 per dollar&comma; only then to fall to 141&period;07&period;<&sol;p>&NewLine;<p>The Nikkei Stock Average extended its loss during the afternoon session&comma; falling over 700 yen&period;<br &sol;>&NewLine;Long-term interest rates rose sharply in the bond market Friday morning ahead of the BOJ&&num;8217&semi;s policy announcement&comma; with the 10-year yield crossing the BOJ&&num;8217&semi;s ceiling of 0&period;5&percnt; for the first time in more than four months&period;<&sol;p>&NewLine;<p>Unlimited bond purchase operations will continue to be held every day to keep the yields from moving outside the range&period; The BOJ also has other measures in place to control the yield curve&comma; including curbs on JGB short-selling and long-term fund supply designed to encourage JGB purchases&period;<&sol;p>&NewLine;<p>The move comes as inflation in Japan has become more embedded than the BOJ previously expected&period; The central bank projected that the core consumer price index&comma; which excludes fresh food&comma; will increase 2&period;5&percnt; during the fiscal year ending March 31&comma; 2024&comma; from a year earlier&period; The projection in its previous forecast was 1&period;8&percnt;&period;<&sol;p>&NewLine;<p><a href&equals;"https&colon;&sol;&sol;www&period;vanguardngr&period;com&sol;">Japan&&num;8217&semi;s core CPI hit 3&period;3&percnt; in June&comma; the 15th straight month above the 2&percnt; inflation target&comma; accelerating from 3&period;2&percnt; in the previous month&period; The BOJ&comma; however&comma; projected a 1&period;9&percnt; rate of inflation for fiscal 2024<&sol;a>&period;<&sol;p>&NewLine;<p>A survey has showed that 73&percnt; of market economists expected there would be no change to the BOJ&&num;8217&semi;s policy framework at this meeting&period;<&sol;p>&NewLine;<p>The BOJ&&num;8217&semi;s accommodative policy sharply contrasts with the global trend&period; The U&period;S&period; Federal Reserve once again raised policy rates by 25 basis points on Wednesday&comma; marking its 11th rate hike in its last 12 meetings&period; The European Central Bank on Thursday raised its benchmark rate back to a record high of 3&period;75&percnt;&period;<&sol;p>&NewLine;<p>The BOJ&&num;8217&semi;s low interest rate policy has made the yen a relatively unattractive investment and vulnerable to selling&period; The yen hit its weakest level of 145 against the greenback this year on June 30&period;<&sol;p>&NewLine;<figure id&equals;"attachment&lowbar;21657" aria-describedby&equals;"caption-attachment-21657" style&equals;"width&colon; 162px" class&equals;"wp-caption alignnone"><img class&equals;"size-full wp-image-21657" src&equals;"https&colon;&sol;&sol;openlife&period;ng&sol;wp-content&sol;uploads&sol;2023&sol;07&sol;Japan&period;jpg" alt&equals;"Japan Provides Flexible Bandwidth For Government Bond Yields To Fluctuate" width&equals;"162" height&equals;"108" &sol;><figcaption id&equals;"caption-attachment-21657" class&equals;"wp-caption-text"><em><strong>Japan&comma; a leading commercial hub in Asia<&sol;strong><&sol;em><&sol;figcaption><&sol;figure>&NewLine;