BOJ Holds 10-Year JGB Yield Cap at 0.5 Pct

Tokyo, Jan. 18 (Jiji Press)--The Bank of Japan on Wednesday decided to hold its recently raised cap on 10-year Japanese government bond yields steady at 0.5 pct, resisting upward pressure on interest rates.

The decision was made by a unanimous vote at a meeting of the BOJ's Policy Board. The bank had seen the JGB yield limit, set as part of its yield curve control, breached repeatedly amid persistent bond selling from market players betting on a further rise in the cap.

Just last month, the central bank stunned the market by tweaking the yield curve control. It decided to allow 10-year JGB yields to move between plus and minus 0.5 pct, against the previous tolerated range of plus and minus 0.25 pct.

At the two-day meeting from Tuesday, the BOJ decided to keep unchanged its policy of guiding 10-year JGB yields around zero pct within the recently expanded range. Its short-term policy interest rate was also held steady at minus 0.1 pct.

The BOJ's yield cap decision sparked massive buying of Tokyo stocks and dollars, as well as heavy government bond purchases, which pushed down the key 10-year JGB yield sharply.

[Copyright The Jiji Press, Ltd.]