BoJ still likely to tweak Yield Curve Control

The Bank of Japan remained under pressure to defend its yield target this week and pledged on Thursday to keep buying an unlimited amount of bonds for as long as necessary. While 10-year JGB yields have dropped below the upper end of the Bank’s tolerance band for now, we think they will soon rise again as overseas yields continue to surge. Accordingly, we still expect the Bank to widen the tolerance band over the coming months.