A good article in the Wall Street Journal discussing the rise in Japanese bond yields and what that means for Kuroda. the article avoids simplistic answers, if you’ve got WSj access, its well worth a read.
The difficulty of Mr. Kuroda’s position was evident in his comments at a news conference Wednesday following a meeting of the central bank’s policy-setting board.
In a departure from his usual practice of expressing himself clearly and simply, Mr. Kuroda’s explanation of the increases in bond yields was complex, prompting reporters to pose the same question repeatedly throughout the 50-minute session.
“It is difficult to say simply whether this is a good interest-rate increase or a bad one,” Mr. Kuroda said, acknowledging that hopes for economic recovery and inflation will also push up rates.
- climbing yields warrant close monitoring, Kuroda: “At this point, I am not expecting them to have any significant impact on the real economy.”
- He also said the central bank’s bond purchases will “continue to exert downward pressure on interest rates.”
Analysts pointed to an inherent contradiction in the bank’s policy.
“There is the dichotomy of what the BOJ’s trying to do, which is spark inflation, which is bad for bonds, and then what they’re actually doing, which is buying bonds,” said Teruyoshi Sotome, a strategist at Mizuho Securities.
No wonder there’s volatility in Japanese markets.
BOJ Chief Struggles With Dilemma of Untested Policy (The Wall Street Journal is often gated, so if you’re unable to access the article try a search of Google news using the headline)
