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MNI POLICY: Short-Term Rate Hike Under YCC One BOJ Scenario

(MNI) Tokyo
(MNI) Tokyo

The BOJ could move away from negative interest rate policy before changing its YCC framework, MNI understands.

The Bank of Japan is once again considering a scenario in which demand strengthens and it is able to raise its overnight lending rate from negative levels while still maintaining yield curve control in order to limit the market reaction, though this is still a low probability outcome, MNI understands.

In recent months, the BOJ has anticipated that it will first gradually loosen and then exit from yield curve control, perhaps by next April, as wage growth firms and inflation stabilises sustainably above 2%.

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The Bank of Japan is once again considering a scenario in which demand strengthens and it is able to raise its overnight lending rate from negative levels while still maintaining yield curve control in order to limit the market reaction, though this is still a low probability outcome, MNI understands.

In recent months, the BOJ has anticipated that it will first gradually loosen and then exit from yield curve control, perhaps by next April, as wage growth firms and inflation stabilises sustainably above 2%.

Keep reading...Show less