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REPEAT: MNI POLICY: BOJ Limits 10-Year Yield Upside in Mkt Op

     TOKYO (MNI) - The Bank of Japan on Friday announced to buy an unlimited
amount of Japanese government bonds with a remaining life of 5 to 10 years at a
fixed-rate of 0.100%, slightly below the 0.110% rate offered in a similar
operation on Monday.
     Friday's operation indicates the BOJ considers the 10-year bond yield at
0.1% the upper limit of its unofficial range for the policy target of keeping
the yield "around zero percent" under the current policy framework, which may be
reviewed at the July 30-31 board meeting.
     On Monday, the BOJ's market operation team had to take action as the rise
in the 10-year bond yield was rapid amid speculation that the BOJ board would
announce measures to reduce the side-effects of large-scale easing next week.
     By contrast, amid a moderate rise in the yield, Friday's operation was
aimed at showing the upper end of the 10-year bond yield that the BOJ tolerates.
     After the operation, the 10-year bond yield fell to 0.090% from 0.100%.
     Under the yield curve control framework adopted in September 2016, the BOJ
has been trying to stabilize the 10-year government bond yield, the benchmark
for long-term borrowing costs, at around zero percent and keep the overnight
interest rate at -0.1%.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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