BOJ board member says lifting 10-year bond yield cap could delay economic recovery

The Bank of Japan must be mindful of the risk that lifting its cap for 10-year Japanese government bond yields could interfere with the country’s economic recovery, policy board member Asahi Noguchi said Thursday.

Noguchi said raising the bond yield cap could reduce the degree of monetary easing by causing a rise in long-term yields, eventually leading to a delay in the economy’s recovery.

“We need to consider tradeoffs between the effects of monetary easing on the macroeconomy and the impact on financial markets,” Noguchi said in a speech.

He added that the shape of the JGB yield curve has looked smooth recently thanks to the bank’s December decision to raise the cap to 0.5% and to falls in global bond yields.

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