The Bank of Japan must be ready to work further toward improving market functions if needed, a central bank policymaker said at a meeting this month, underscoring the bank's concern over the rising cost of its bond yield control policy.
While global banking woes have taken some upward pressure off long-term interest rates, the debate underscores the challenge incoming BOJ Gov. Kazuo Ueda faces in keeping borrowing costs low — without draining market liquidity with aggressive bond buying.
At the March meeting, the BOJ maintained its ultraloose policy, including a controversial 0.5% cap for the 10-year bond yield that had come under attack from markets betting on a near-term interest rate hike.