TOKYO -- The Bank of Japan may steer long-dated interest rates to a higher target level next year if the current economic and market climate continues. But the BOJ would also need to manage optics in order to avoid the perception that it is tightening policy.
The BOJ has been busy controlling long-term interest rates ever since introducing a new policy framework in September. A depreciating yen and robust stock market rally have been putting upward pressure on yields since early November. The BOJ responded with a fixed-rate purchase operation of Japanese government bonds on Nov. 17, followed by an offer to buy more longer-maturity bonds on Wednesday.
