Central Bank of Japan left unchanged control over the yield curve, rates

TOKYO, Jan 18 (Reuters) – The Bank of Japan held onto ultra-low rates on Wednesday and upheld its 0.5% yield ceiling on 10-year government bonds, despite widespread market expectations that the regulator would begin to roll back massive stimulus on amid rising inflationary pressures.

At the end of the two-day meeting, the Japanese central bank unanimously decided not to change the targets for controlling the yield curve: the benchmark for short-term debt remained at minus 0.1%, and the target yield on 10-year government bonds was around 0%.

In addition, the Central Bank of Japan did not begin to correct the range of fluctuations in the yield of 10-year government bonds, which it expanded in December to plus or minus 50 basis points from the target of 0%.

The Bank of Japan caused turmoil in the markets in December by unexpectedly widening the range of yield fluctuations. Analysts said the move failed to correct market distortions caused by the regulator’s active bond buying. (Leika Kihara, Tetsushi Kajimoto, Kantaro Komiya)

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