Bank of Japan officials see several reasons against intervening in the bond market even after benchmark yields hit the highest level since 2008, according to people familiar with the matter who have elaborated on the thinking behind recent remarks from Gov. Kazuo Ueda.
Speaking in parliament Wednesday, Ueda indicated he has little problem with the recent rising yield trend, as it reflects the market’s view on Japan’s economy and inflation and shifts in interest rates overseas. The BOJ is broadly aligned with those views, he said.
Officials are determined not to step into the market unless extreme moves take place, for fear of creating thresholds for traders that would impact market functioning, according to the people. The market should decide rates and investors need to get used to a world without the central bank’s yield curve control after the program ended last year, they said.
