WHY DID JAPANESE BOND YIELDS PLUNGE TO ALL TIME LOW

The drop in Japanese bond yields has been attributed to investors switching from low-yield bonds in Europe to higher-yielding Japan But analysts say it is also due to the Bank of Japan's aggressive monetary policy, which is aimed at lowering the yen's value to boost exports and reignite inflation Its bond-buying programme has been running for several years https://www.reuters.com/world/asia-pacific/japans-central-bank-keeps-up-yield-defense-focus-bond-buying-schedule-2022-03-31/ Bank of Japan has 6.2 trillion dollars in financial assets portfolio with 72 percent being bonds https://www.reuters.com/world/asia-pacific/japans-central-bank-keeps-up-yield-defense-focus-bond-buying-schedule-2022-03-31/ The programme has been criticised by the International Monetary Fund and foreign investors, who argue that the BOJ may have to sell the bonds it buys to raise capital, thus raising the country's debt levels WHAT HAS THE BOJ DONE TO REVERSE THE CURRENCY'S RISE? The BOJ has said it will continue to buy government bonds until inflation, as measured by the consumer price index, reaches 2% It also said it would increase the yield on the 10-year government bond to 0 1% from around 0 0%, which means the central bank would pay investors interest of just 0 1% to hold their government bonds The bank's governor, Haruhiko Kuroda, said it was "inflation-denialist policy" but that it would be effective in fighting deflation Analysts say the central bank's bond-buying programme, which it launched in April 2013, has been effective in weakening the currency and boosting exports But they worry that the BOJ's decision to keep buying government bonds and promising to keep interest rates low for years to come could lead to an asset bubble, which could hurt the economy WHAT IS THE FUTURE OF JAPAN'S MONETARY POLICY? Japan's central bank has agreed to continue with its stimulus programme until deflation has been beaten, but some analysts say the central bank could soon start winding down "Now that the economy has improved, it's time to remove the monetary stimulus," said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co