Bank of Japan’s (BOJ) bond intervention started to show its effects on the second day.
Investors sold 242.6 billion yen ($2 billion) of bonds to the Central Bank. The yen rose as the 10-year bond yield fell. Due to the sales in the global bond market, the long-term bond yields beyond BOJ’s control continued to be fragile.
BOJ officials announced that they would make unlimited purchases of 10-year bonds by intervening in the bond market for the second time since February in order to keep the yields under control .
Naomi Mugurama, Economist at Mitsubishi UFJ Morgan Stanley in Tokyo, “The BOJ has maintained its strong stance so that its 10-year yield does not exceed 0.25 percent.” made its assessment.
BOJ officials remain committed to loose monetary policy, despite rising inflation in the world and the fact that some major Central Banks, such as the Fed, decreased their asset purchases and increased interest rates.
BOJ Chairman Kuroda is determined to keep the 10-year bond yield close to 0.25 percent, far from the 2 percent inflation target. However, bond yields did not fall much, and the 10-year interest rate hovered at 0.245 percent today.
Credit Agricole Securities Chief Economist, Asia Kyohei Morita, “Market rates are closer to the BOJ’s ceiling than ever before, and the BOJ has signaled that it will ‘not allow it to stay above 0.25 percent’.” made his comment.