Investors are on high alert for further policy tweaks from the Bank of Japan this week after December’s shock decision to raise the bar on yield movements failed to significantly improve liquidity in the market.
While almost all polled economists expect no change at the two-day meeting finishing Wednesday as their main scenario, market pressure on the central bank’s stimulus framework has intensified since last month’s efforts to ease the side effects of its policy.
Another increase in the key 10-year yield’s permitted trading ceiling is seen as the most likely course of action, should the BOJ act, given the bank’s recent emphasis on improving bond-market functioning.