BY MAKIKO YAMAZAKI AND LEIKA KIHARA
TOKYO — Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank will be vigilant to the risk large swings in super-long bond yields could affect shorter-term borrowing costs and have a bigger impact on the economy.
The remarks underscore the BOJ’s growing attention to recent volatile moves in super-long bond yields, which could affect the board’s discussions next month on the pace of bond tapering.
In Japan, short- and medium-term interest rates have a larger impact on the economy than super-long yields due to the duration of household and corporate debt, Ueda said.
“But we will bear in mind that large swings in super-long yields could affect long-term bond yields as well as those on short and medium-term bonds,” Ueda told parliament.
“We’ll carefully watch market developments and their impact on the economy,” he added.
Ueda also said uncertainties surrounding US trade policy and its fallout on Japan’s economy remain high.
Yields on super-long Japanese government bonds (JGB) rose to record levels last week as part of a global sell-off in bonds reflecting growing market attention to the worsening finances of advanced economies.
