The Bank of Japan’s two-day meeting (which concludes on Wednesday) is unlikely to result in any major policy changes. Governor Kuroda will want to address the recent jump in JGB yields, although we believe he would be justified in taking a relatively sanguine view. He will probably stress that it would be normal for long-term interest rates to rise as the outlook for the economy and prices improves, but also that the Bank stands ready to cap any premature surge. This message might be underlined by further tweaks to the bondbuying programme and a relaxation of the terms of the Securities Lending Facility (SLF).
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