The Bank of Japan will review the spillover effects of its monetary easing at policy meetings next week and may take additional steps to correct distortions in the yield curve, the Yomiuri newspaper reported on Thursday.
Last month, the Bank of Japan surprised markets by widening the band around its 10-year bond yield target, a move that allowed yields to rise to 0.50 percent from the previous limit of 0.25 percent.
However, this measure has not served to correct the distortions caused in the fixed income market by the massive purchase of bonds by the Bank of Japan (BoJ), which has increased speculation in the market, according to analysts. The central bank will take additional steps as early as its monetary policy meeting next week.
At the meeting, the BoJ’s nine board members will discuss the side effects of its yield curve control (YCC) strategy and bond market movements since the December decision, Yomiuri said.
It will also examine whether the BOJ can correct market distortions by adjusting the amount of bonds it buys, and adopt additional monetary policy adjustments if necessary, the newspaper said without citing sources.