TOKYO (Reuters) – The Bank of Japan is expected to slightly widen an implicit band at which it allows long-term interest rates to move around its 0% target, the Nikkei newspaper reported on Thursday.
The move will be among steps the BOJ will unveil on Friday to make its massive stimulus programme sustainable, the Nikkei said, as the COVID-19 pandemic is seen prolonging a battle to achieve its 2% inflation target.
At present, the BOJ allows 10-year bond yields to rise and fall 0.2% each around its 0% target. It will widen that band and tolerate rises and falls of 0.25% each, the Nikkei said, without citing any sources.
By allowing yields to move in a wider range, the BOJ will help ease the strain ultra-low interest rates and a flattening yield curve inflict on financial institutions’ profits, the paper said.
At the review, the BOJ is also seen removing a pledge to buy exchange-traded funds (ETF) at an annual pace of 6 trillion yen ($55 billion), the Nikkei said without citing sources.
In removing the 6-trillion-yen guidance, the BOJ will stress its readiness to ramp up purchases only in times of market turbulence, the Nikkei said.
(Reporting by Leika Kihara; Editing by Chang-Ran Kim and Ana Nicolaci da Costa)
