MNI BRIEF: Impact Of Big Drop In Longer-End JGB Ylds BOJ Worry

The Bank of Japan said on Friday that an excessive drop in longer-end Japanese government bond yields could be worrying for the future sustainability of financial activity functions in a broad sense.

It could "have a negative impact on economic activity by, for example, undermining people's sentiment," the bank said. "The effects of the decline in interest rates on economic activity and prices are relatively large for short- and medium-term interest rates," the BOJ said.

However, the bank didn't elaborate on how to prevent a sharp fall in these bond yields. There is speculation that the BOJ may reduce the scale of its longer-end bond purchases.