As yields creep up, BOJ’s Kuroda calls rates ‘very low’

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda on Friday reiterated the need to keep interest rates “low to a low level” to protect the economy from the COVID-19 pandemic, warning that expectations for recovery full of uncertainty.

Kuroda also said that the central bank was already buying exchange traded funds (ETFs) under normal guidelines, indicating a recent slowdown in buying as Japanese stock prices are rising at multiple high levels. -year.

“It is now important to keep the whole output curve low as the economy suffers the damage from COVID-19,” Kuroda told parliament, when asked if the BOJ would allow rates long-term move further away from their 0% target.

“The BOJ does not expect to push up (10-year bond yield) above its target by around 0%,” he said.

The comments came as higher inflation and high U.S. fiscal spending expected global bond yields to rise, pushing up the yield on 10-year Japanese government (JGB) benchmark bonds to 0.175%.

It was at its highest level since January 2016, when the BOJ started negative interest rates, and near the top of the range the central bank is thought to be targeting the 10-year yield.

Under its policy for yield curve control, the BOJ manages short-term rates at -0.1% and 10-year JGB yields around zero.

Numerous markets are profiting The BOJ will allow results to move at a wider range around its 0% target in a review of their policy instruments scheduled for March.

Kuroda said the BOJ will look at ways to make its policy framework more flexible and efficient. As part of those efforts, it will examine why prices did not rise enough, he said.

“The BOJ will examine the effects and side effects of our asset purchases with the hope of making them more efficient and sustainable,” Kuroda said.

“We are already buying ETFs flexibly as it is possible to do so even under current guidelines. ”