Central Bank Impressions

Is the BOJ Flying a Stealth Helicopter?

In September, the BOJ adopted a new policy framework labelled QQE with Yield Curve Control (YCC), whose main features were recently discussed in Washington (on the side-lines of IMF meetings) by BOJ Governor Haruhiko Kuroda. In fact, the market has been puzzled about what YYC associated to QQE (with a negative policy rate) effectively means, and in particular whether the indication of “zero” for the 10y JGB yield level should be considered a cap/ceiling (or conversely a floor) or the middle of an acceptable range.

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