Bank of Japan Gov. Kazuo Ueda signaled a readiness to intervene in the bond market to quell a surge in yields, reiterating the central bank’s long-standing commitment to supporting stable markets.
"Moves in bond yields fluctuate to a certain degree,” Ueda said in response to questions in parliament Friday. "However, we will purchase government bonds nimbly to foster the stable formation of yields in exceptional cases where long-term yields rise sharply.”
Bond yields fell and the yen weakened following Ueda’s comments. Earlier Friday benchmark yields touched a fresh 15-year high after consumer inflation accelerated in January.
"Markets were looking out for clues from Ueda with regards to the recent rise in JGB yields,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. in Singapore. "Ueda’s comments on buying bonds nimbly if yields rise sharply serve as a reminder that the BOJ is watching markets closely, and policymakers can step in if there is any ‘excessive volatility’ in the bond space.”
The BOJ has said in the past that it would conduct bond purchases in the event of a sharp increase in bond yields.
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