The Bank of Japan said Friday it will allow “greater flexibility” in controlling bond yields, as it raised its full-year inflation forecast to 2.5 percent from its previous estimate of 1.8 percent.
It said it would continue to allow 10-year JGB yields to “fluctuate in the range of around plus and minus 0.5 percentage points from the target level, while it will conduct yield curve control with greater flexibility regarding the upper and lower bounds of the range as references, not as rigid limits,” the central bank said in a statement.
The yen weakened to 139.95 per dollar after the announcement, from around 139.12 yen in the morning.
The BoJ took a similar measure in December when it expanded the so-called yield curve control (YCC) range for government bonds to around plus or minus 0.5 percentage points, from a tighter range of plus or minus 0.25 percentage points.
Analysts have said the YCC is increasingly harming the economy by skewing the bond market and accelerating the yen’s weakness, prompting inflation of imported goods.
