ZJPN - Trouble With The Yield Curve?
- The Bank of Japan has implemented strict yield curve control in the 2-10-year area of the JGB curve since 2016, in an attempt to prevent financial conditions from tightening and to boost Japanese inflation to 2%.
- Other government yield curves, where central banks have not targeted any specific nominal yield level, have been more stable in 10s/2s, apart from the US.
- Overall, the RBA's experience, even with partial, or front end, yield curve control since March 2020 is a sobering reminder that it is not straightforward and comes with clear risks, both to credibility and control of the central bank balance sheet.
For further details see:
Trouble With The Yield Curve?