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Tokyo, Oct 31 (EFECOM).- The Bank of Japan (BoJ) decided today to make the margin for long-term state bond yields even more flexible, by placing 1% as a new reference point, in a new maneuver in response to the continued rise of these rates and the devaluation of the yen.
The members of the entity’s monetary policy board unanimously approved today at their meeting “to consider the upper zone of 1% as a reference” for their operations in the markets of these bonds, which will continue “on a large scale” and based on its evolution.
The new flexibility of the yield margin for bonds takes place after the similar measures taken by the entity at the end of 2022 and last July, and comes in the face of the insistence in the debt markets to test the upper limit set by the Japanese central bank. .
The entity, at the same time, unanimously decided to maintain short-term reference interest rates at -0.1%, and long-term rates at around 0%.
Last July, the BoJ had raised the fluctuation range of ten-year bond yields to 0.5%, although with the cap at 1%.
But the Japanese central bank was forced to carry out unlimited purchases of these increasingly frequent assets to keep rates within those limits, and now seeks greater room for maneuver with its latest decision, in the context of also rising yields. of US bonds and other major economies.
In this way, the BoJ “will patiently continue with its monetary flexibility”, and with the aim of achieving “a virtuous cycle of wage and price increases” that will allow it to achieve its sustained inflation objective of 2%.
The yields of the Japanese bond reached 0.9555% this Tuesday, their highest level in a decade, amid expectations of a new adjustment of the measures of the central bank of the third world economy.
The dollar, likewise, was trading this Tuesday in the high area of 149 yen, after having surpassed the psychological barrier of 150 yen last week.
The contrast between the monetary policy of the BoJ, which persists in its ultra-low rates to achieve the aforementioned inflation objective, and the continuous increases in these rates applied by the US Federal Reserve or the European Central Bank have caused a continuous devaluation of the yen against both foreign exchange.
This increases the cost of imports of raw materials and energy from Japan, which has accelerated an inflation that both consumers and companies have suffered, without fully achieving the goal of wage increases and economic growth to which the country aspires. Boxwood.
Given the need to maintain its stimulus measures in this scenario, the BoJ seeks to continue financing public debt at low cost, for a country that has the highest debt ratio relative to its gross domestic product among developed economies. EFECOM
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