MNI INSIGHT: No BOJ Intervention Now As 10-Yr JGB Yield Rises

The Bank of Japan will not intervene to curb the 10-year Japanese government bond yield after it touched its highest since the yield curve control policy was introduce, except for emergency or crisis situations, MNI understands.

The 10-year JGB yield briefly rose to 0.185% on Monday, still within the range of “between around plus and minus 0.25%. set in March 2021. The 10-year bond yield closed at 0.180% on Tuesday at mid-day.

But BOJ officials are focused on the risks of higher long-term interest rates and the impact on easy policy, see: MNI INTERVIEW: Leave 10-Year JGBs To The Market-Ex-BOJ Aide.

The BOJ tolerates movements in the 10-year Japan Government Bond (JGB) benchmark based on developments in the economy and the inflation rate in addition to U.S. Treasury bond moves, and leaves smaller JGB moves to markets as much as possible.

On the other hand, the BOJ has powerful tools to curb higher JGB yields, such as fixed-rate purchase operations for consecutive days and an unlimited amount of JGBs with certain maturities at fixed rates.

Major Japanese commercial banks announced individual 10-year fixed housing loan rates in February at the highest levels in over five years based on the 10-year JGB yield.