In December 2022 Bank of Japan announced that it is going to continue with its Yield curve control policy but expanded the range for movement of the yields.This led to the fall in the equity markets and Yen appreciated against dollar. Bank of Japan on January 20,2023 stated that it intends to continue with the ultra easy monetary policy and Yield curve control measure after widening the trading band in December 20222.
Yield curve control policy is a tool used by central banks to keep the long term yields at lower/desirable levels. This exercise is carried out by the central banks when it feels that some sort of stimulus is required for the economy and as the long term rates are contained more economic activity may take place and at the same time reduce the borrowing cost of the government.
Tune in to the podcast to understand the nuances of this activity and its impact on markets.