BOJ to widen band around long-term rate target on Friday: Nikkei

BOJ to widen band around long-term rate target on Friday: Nikkei
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Economy52 minutes ago (Mar 17, 2021 11:55PM ET)

BOJ to widen band around long-term rate target on Friday: Nikkei
© Reuters. FILE PHOTO: A security guard walks past in front of the Bank of Japan headquarters in Tokyo

TOKYO (Reuters) – The Bank of Japan is expected to slightly widen an implicit band at which it allows long-term interest rates to move around its 0% target, the newspaper reported on Thursday.

The move will be among steps the BOJ will unveil on Friday to make its massive stimulus programme sustainable, the Nikkei said, as the covid-19 pandemic is seen prolonging a battle to achieve its 2% inflation target.

At present, the BOJ allows 10-year bond yields to rise and fall 0.2% each around its 0% target. It will widen that band and tolerate rises and falls of 0.25% each, the Nikkei said, without citing any sources.

By allowing yields to move in a wider range, the BOJ will help ease the strain ultra-low interest rates and a flattening yield curve inflict on financial institutions’ profits, the paper said.

At the review, the BOJ is also seen removing a pledge to buy exchange-traded funds (ETF) at an annual pace of 6 trillion yen ($55 billion), the Nikkei said without citing sources.

In removing the 6-trillion-yen guidance, the BOJ will stress its readiness to ramp up purchases only in times of market turbulence, the Nikkei said.

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