Takashi Fujiwara, chief fund manager at Resona Asset Management, said the Bank
of Japan’s statement that short- and medium-term real rates remain negative may
signal it does not want ultra-long bond yields to rise further. He added the BOJ
may be indicating that keeping short-term rates low eases corporate financing
and could encourage firms to move into higher-risk activities. The BOJ’s
coupling of economic and price commentary suggests it still has scope to
tighten; even if inflation eases after reopening of the Strait of Hormuz, the
BOJ could point to economic growth to justify further rate increases.
