BoJ may yet widen its tolerance band

The Bank of Japan resisted the temptation to widen its tolerance band for 10-year JGB yields today, but it did outline that it will from now on conduct unlimited fixed rate auctions every business day until yields drop back comfortably below its ceiling of 0.25%. While that has pushed down yields for now, we still think the Bank will eventually choose to widen its tolerance band to ±0.50%. Bank of Japan Drop-In (29 April, 15:00 SGT/08:00 BST): We’ll be discussing whether the Bank of Japan can get a grip on JGB yields and the yen in a special online briefing on Friday. Register now

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