by Kevin Buckland and Junko Fujita
TOKYO (Reuters) – Yields on Japan’s 10-year government bonds briefly breached the 0.5% ceiling set by the Bank of Japan (BoJ) last month on Friday before falling on the back of a wave of weakness. central bank emergency purchases.
This is the most direct pressure to date against the ultra-accommodative policy of the BoJ, which announced in December a widening of the fluctuation range it tolerates on the yields of Japanese ten-year government bonds with a ceiling set at 0.5% against 0.25% previously.
On Thursday, the Yomiuri daily reported that the BoJ will study the side effects of its monetary policy at its meeting scheduled for next week and may take further steps to correct yield curve distortions (YCC), reigniting speculation about an end to the quantitative easing implemented in Japan.
The yield on Japanese ten-year bonds rose to 0.54% on Friday, the highest level since mid-2015 and well above the range of -0.5% to +0.5% tolerated by the Bank of Japan.
This prompted the BOJ to announce two separate rounds of emergency bond purchases with a combined value of around 1.8 trillion yen (12.81 billion euros), allowing the ten-year bond yield to ebb. gradually to 0.5% at 06:03 GMT.
“The attack on the BoJ, mainly from foreign investors, continues,” said Takafumi Yamawaki, director of Japanese rates research at JP Morgan Securities.
Unlike most major central banks around the world, which turned the page on monetary policy stimulus in the face of high inflation, the Bank of Japan is sticking to an accommodative strategy despite signs of a rise in prices and wages in the archipelago.
(Reporting Kevin Buckland, Junko Fujita and Wayne Cole; French version Claude Chendjou, editing by Kate Entringer)