The Bank of Japan is contemplating abandoning its yield curve control program, as reported by the Japan-based JiJi media outlet. Instead of targeting specific bond yields, the bank may opt to disclose the amount of government bonds it intends to purchase in advance. This potential shift is part of the bank’s broader efforts to normalize its monetary policy and move away from guiding benchmark 10-year government bond yields to around 0%.
According to JiJi, the new framework being considered by the Bank of Japan would focus on the volume of bond purchases rather than manipulating the yield. These proposed changes are expected to be deliberated and potentially implemented at the upcoming policy meeting scheduled to conclude on March 19. The bank may also discuss discontinuing negative interest rates as part of its strategic review, signaling a significant shift in its approach to monetary policy.
In response to previous adjustments to the Yield Curve Control program, such as recent announcements aimed at maintaining an ultra-loose monetary policy, the USD/JPY currency pair experienced fluctuations with the yen initially appreciating before rebounding. It remains to be seen how the market will react to any forthcoming decisions made by the Bank of Japan during its upcoming meeting on March 18 and 19.
