The Bank of Japan is playing some major games with the market

<p>The Bank of Japan rate decision is due later (Friday morning in Tokyo) and it just got far more interesting.</p><p>Last week, and for some time before, the Bank of Japan repeatedly beat back on growing expectations they would drop yield curve control. BOJ Governor Ueda came out himself and said there was "still some distance to sustainably achieve 2% inflation target" and that unless their assumptions on need to sustainably achieve 2% target changes "our narrative on monetary policy won't change."</p><p>That comment was delivered in US hours, so it appeared to be specifically aimed at markets. And if there was any doubt, it was followed by Friday's <a href="https://www.forexlive.com/centralbank/boj-reportedly-erring-towards-leaving-policy-unchanged-next-week-20230721/" target="_blank" rel="follow">apparent leak to Reuters</a> — citing 5 sources — that the BOJ is not likely to introduce any changes to its yield curve control settings at this meeting.</p><p>Well forget all that. Because now there is another leak, this time to Nikkei that <a href="https://www.forexlive.com/centralbank/boj-will-discuss-tweaking-yield-curve-control-report-20230727/" target="_blank" rel="follow">strongly hints </a>that the 0.50% cap in 10-year yields will effectively be dropped and replaced with a policy to combat spikes.</p><p>These kinds of games from the Bank of Japan are nothing new. I <a href="https://www.reuters.com/article/global-forex-idCAKBN2Z4016" target="_blank" rel="nofollow">spoke with Reuters</a> earlier this week and <a href="https://www.forexlive.com/centralbank/the-bank-of-japan-walks-a-fine-line-as-yen-strength-unwinds-20230721/" target="_blank" rel="follow">warned </a>about the BOJ and how market participants don't trust them. I also talked about the risks with Dale Pinkert <a href="https://youtu.be/x63xwKNOOfk?t=1143" target="_blank" rel="nofollow">in this video</a>, warning about the meeting and arguing the only trade was to "stay up late" for today's meeting.</p>

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