Bank of Japan's Yield Curve Control Strategy

The Bank of Japan has shifted its yield curve control policy, aiming to increase flexibility in its buying operations to reclaim control over yield curve control control. The policy change adds uncertainty as to where the goalposts lie and could lead to market dysfunction if yields press against a stated level. The bank will need to be more active in managing the pace of the yield curve, using different buying tools and operations to avoid fixed-rate unlimited buying. The change in policy could also have implications for global fixed income trends, potentially impacting other central banks like the Federal Reserve and the European Central Bank.