Bank of Japan monetary policy decision and statement - says will manage YCC more flexibly but maintains 0.5% band.

  • Maintains short-term interest rate target at -0.1%
  • Maintains 10-year JGB yield target around 0%
  • Maintains band around 10-year JGB yield target at up and down 0.5% each

Raised their inflation forecasts for this year, but not the next:

  • Core-core CPI fiscal 2023 median forecast at +3.2% vs +2.5% in April
  • Core-core CPI fiscal 2024 median forecast at +1.7% vs +1.7% in April
  • Core-core CPI fiscal 2025 median forecast at +1.8 % vs +1.8% in April


  • Will guide yield curve control more flexibly
  • Appropriate to heighten sustainability of monetary easing
  • Will operate yield curve control more flexibly to respond nimbly to upside, downside risks
  • Will keep offering fixed-rate operations for 10-year jgb yield at 1.0%
  • In order to encourage formation of yield curve that is consistent guideline, BOJ will continue with large-scale jgb buying and make nimble responses for each maturity
  • For example, by increasing amount of JGB buying and conducting fixed-rate purchase ops and funds-supplying ops against pooled collateral
  • There are extremely high uncertainties for Japan's economy, prices
  • Must pay attention to financial, fx markets and their impact on Japan's economy, prices
  • Japan's consumer inflation higher than projected in April outlook report


  • Wage growth has risen, signs of change have been seen in firms' wage, price-setting behaviour
  • Inflation expectations have shown some upward movements again
  • If upward movement in prices continue, effects of monetary easing will strengthen through decline in real interest rates
  • Strictly capping long-term yields could affect bond market functioning, volatility in other markets
  • Such effects are expected to be mitigated by conducting yield curve control with greater flexibility
  • If downside risks to economy materialise, effects of monetary easing will be maintained through decline in long-term yields under yield curve control framework

BOJ quarterly report:

  • Risk to inflation skewed to upside for fiscal 2023, 2024
  • Japan's economy is recovering moderately
  • Inflation expectations showing signs of heightening again
  • Japan's economy likely to continue recovering moderately
  • Japan's economy to continue expanding above potential
  • Japan's consumer inflation likely to slow pace of increase, then re-accelerate as inflation expectations, wages rise


Bolding above is mine. The Bank has given a very minor YCC concession, saying they'll manage it more flexibly. I don't know what that means, but on face value it's a nod to those calling for a wider band. Perhaps we'll see that in the weeks ahead but I am only guessing without more detail from the Bank. The Bank made a point of saying the 0.5% either-way band is still in place but left themselves some flexibility to widen it on a day to day basis to 1%. The Bank could do with some communication lessons. it appears the +/-0.5% is still in place, but there is a 'maybe' to take it to +/-1%. Sheesh.

There was a dissenter. BOJ makes decision on YCC by 8-1 vote:

  • Board member Nakamura dissents to decision on YCC
  • Nakamura dissents to decision on YCC, considering it was desirable to allow greater flexibility after confirming rise in firms' earnings power from sources such as financial statements statistics
  • Nakamura dissents to decision on YCC but in favour of idea of conducting YCC with greater flexibility

Nakamura in favour of getting on with a move towards more flexibility for yields. It appears he was arguing for a firm move to +/- 1%, not this wishy-washy 'maybe 1%' if wiggle room is needed. The longer the Bank of Japan sticks to +/-0.5% the more painful it'll be for them when they do capitulate. And they will.

Ueda Under the Wave off Kanagawa

Bank of Japan Governor Ueda holding back the wave of calls for a tweak. Ueda's press conference is next, coming at 0630 GMT, 0230 US Eastern time.