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BOJ seen flexible on long-term JGB yields

Jiji Press TOKYO (Jiji Press) — Bank of Japan policymakers expressed their tolerance of rises in 10-year Japanese government bond yields to around 0.2 percent at a monetary policy meeting last week, the BOJ said Wednesday.

“It is appropriate to bear in mind that the long-term yields may move upward and downward at about double the [current] range of around plus or minus 0.1 percent,” a Policy Board member told the July 30-31 meeting.

Another remark at the meeting said it “can be considered appropriate” to allow the yields to move between plus and minus 0.25 percent, according to a summary of opinions expressed at the meeting. The BOJ disclosed the summary Wednesday.

At the meeting, the BOJ voted to make its yield curve control more flexible by tolerating some rises in the 10-year JGB yields, in order to make its current policy framework sustainable.

One remark said the decision is aimed at preparing for the possibility of “continuing monetary easing much longer.”

Another indicated the importance of making “flexible policy adjustments” while taking into account both positive and negative effects of the current policy.

But one remark showed concerns about higher long-term interest rates, saying, “Making policy adjustments that could allow the long-term yields to rise may lead to an increase in real interest rates and thereby contribute to sluggish prices.”

In the quarterly Outlook for Economic Activity and Prices report adopted at the meeting, the BOJ revised down its inflation projections for the three years through fiscal 2020.

Price developments “have been weak and unstable,” a member said. “Achieving 2 percent inflation will take some time.”Speech

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