Advertisement

       SKIP ADVERTISEMENT

       You have a preview view of this article while we are checking your access. When we have confirmed access, the full article content will load.

       Supported by

       SKIP ADVERTISEMENT

       Japan Takes Another Step Away From Easy Money

       The Bank of Japan said it would be more flexible in how it manages government bond yields, citing rising inflation.

       Share full article

       Kazuo Ueda, the governor of the Bank of Japan, at a news conference on Tuesday. Decisions by the central bank can reverberate in global markets. Credit...Agence France-Presse, via Jiji Press/AFP via Getty Images

       By Rich Barbieri and Joe Rennison

       Rich Barbieri reported from Seoul and Joe Rennison from New York.

       Oct. 31, 2023Updated 5:13 a.m. ET

       The people who work the levers of Japan’s economy are in a bind: The country’s low-interest rates, which they have long used to goose growth, are now well out of step with other big economies. Bridging that gap is tricky.

       The yen is at a near-record low against the U.S. dollar, threatening to inflict prolonged inflation on Japan, which for years suffered the opposite problem, deflation. But if policymakers in Tokyo loosened their grip too much and rates rose too high, they could force higher borrowing costs on Japan’s businesses and consumers and cause havoc in financial markets.

       On Tuesday, the central bank, the Bank of Japan, tried to thread the needle, announcing a policy that aims to nudge bond yields higher. The bank said it would use 1 percent as a starting point for yields on 10-year government bonds, instead of a cap, saying it expected inflation to go higher than it had previously believed. In July, it had announced it would allow those yields to rise above 0.5 percent, which had been the bank’s ceiling.

       Decisions by the Bank of Japan reverberate around the world, especially in American markets. Interest rates in the United States are well above Japan’s — yields on 10-year U.S. Treasury notes briefly pushed above 5 percent recently, a level not seen since 2007.

       Ten-year government bond yields

       Source: FactSet

       By The New York Times

       We are having trouble retrieving the article content.

       Please enable JavaScript in your browser settings.

       We are confirming your access to this article, this will take just a moment. However, if you are using Reader mode please log in, subscribe, or exit Reader mode since we are unable to verify access in that state.

       Confirming article access.

       If you are a subscriber, please log in .

       Advertisement

       SKIP ADVERTISEMENT