The Bank of Japan unveiled today that it had discussed tweaking the planned reduction in its bond purchase plan in response to the huge sell-off triggered by PM Takaichi’s campaign pledge to suspend the sales tax on food. But the fact that it didn’t suggests that the bar for an intervention is high and Governor Ueda argued that it’s up to the government to restore confidence in the public finances. The key point though is that the current level of the 10-year yield is hardly inconsistent with economic fundamentals and we expect it to rise further still.
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