The central bank governor and architect of Japan’s monetary policy special path will step down in April 2023. Will the Bank of Japan use the leadership change to hike interest rates?
(Photo: Bloomberg)
Tokyo The Bank of Japan has so far been the only major central bank to resist the rate hike. This special path could possibly come to an end soon – and cause severe upheavals on the financial markets. UBS economists have assessed the global impact.
Since April, the Japanese central bank has been buying ten-year government bonds (JGBs) on a large scale in order to keep interest rates below 0.25 percent. This is the upper limit of the interest corridor for this security class.
With the so-called “yield curve control”, the central bank does not set a key interest rate like other banks, which it defends. Instead, it wants to control the entire yield curve, i.e. the interest rates of bonds of all maturities. She introduced the instrument in 2016.
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