The Bank of Japan could help prevent abrupt policy changes later by allowing more flexibility in its bond yield curve control, the International Monetary Fund said in its global financial stability report released on Tuesday.
Under yield curve control (YCC), the BOJ guides the 10-year government bond yield around 0% as part of efforts to sustainably achieve its 2% inflation target.
The central bank's decision in December to widen the tolerance band around the yield target has heightened market bets of a further near-term tweak or end to YCC.