The Bank of Japan is dropping hints it will consider allowing long-term interest rates to deviate further from its 0% target, a move that could undermine the purpose of its policy aimed at controlling the shape of the yield curve.
BOJ Gov. Haruhiko Kuroda told reporters on Thursday the idea could be among options discussed in March, when the bank will review its tools to make them "sustainable and effective."
The move would highlight the difficulty of maintaining yield curve control (YCC) as deflationary pressures from the coronavirus crisis threaten to prolong the BOJ's already protracted battle to hit its elusive 2% inflation target.
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