The 10-year Japanese government bond yield has fallen to a record low of less than 0.1% following the Bank of Japan’s decision to cut its deposit rate to -0.1%. We now forecast that the 10-year JGB yield will fall to -0.25%, as the BoJ reduces its deposit rate further towards -1.0%. This yield is similar to the current level of the 10-year government bond yield in Switzerland, where the interest rate on sight deposits is already -0.75%.
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