BOJ will discuss tweaking yield curve control – report

<ul><li>Will discuss letting long-term rates rise above 0.50% limit "by a certain degree"</li><li>Under the more flexible policy being considered, the BOJ would permit gradual increases above the 0.5% threshold, but still clamp down on any sudden spike</li><li>The proposed change would keep the rate ceiling, but allow for moderate rises beyond that level.</li><li>The report highlights positive effects on inflation from a stronger yen</li><li><a href="https://asia.nikkei.com/Economy/Bank-of-Japan/BOJ-to-discuss-yield-curve-control-tweak-to-allow-rates-over-0.5" target="_blank" rel="nofollow">Full report</a> from Nikkei</li></ul><p>The yen rallying hard on this (ie USD/JPY falling). The report cites a BOJ survey of Japanese banks that says they expect 0.5% 10-year yields if YCC dropped but I think that's optimistic given inflation rates in Japan.</p><p>To me, this sounds like a plain-old dropping of YCC with some caveats to stop spikes. Today's meeting just got a whole lot more interesting.</p>

This article was written by Adam Button at www.forexlive.com.