tokyo<u+2014>the bank of japan on thursday offered to buy an unlimited amount of japanese government bonds at fixed rates for the first time since the introduction of a new policy framework<u+2014>a sign of its concerns over recent rises in yields. the move is the first clear sign from the central bank that it intends to take action to keep a lid on rising yields, and took market participants by surprise. <u+201c>i thought there was still a lot more room left<u+201d> before the boj took action, said masahiro ichikawa, senior strategist at sumitomo mitsui asset management. the boj<u+2019>s move followed a sharp rise in government bond yields globally, sparked by expectations that the presidency of donald trump would lift inflation and growth. japanese government bond yields have risen as well, but not as sharply. the 10-year yield rose to its highest level since march on wednesday. yields on two-year and five-year japanese government bonds fell thursday after the boj<u+2019>s announcement. the 10-year yield also briefly fell to 0.010% after hitting as high as 0.025% earlier in the morning. speaking in parliament, bank of japan gov. haruhiko kuroda said he wouldn<u+2019>t allow market pressure from abroad to dictate the course of japanese government bond yields, highlighting his resolve to hold interest rates down. <u+201c>interest rates may have risen in the u.s., but that doesn<u+2019>t mean that we have to automatically allow japanese interest rates to increase in tandem,<u+201d> mr. kuroda said in thursday<u+2019>s action, the boj offered to buy unlimited amounts of government bonds with terms of between one year and five years at a fixed price. it was the first such move since the central bank introduced what it called <u+201c>yield curve control<u+201d> in september, an attempt to keep short-term interest rates low while allowing longer-term rates to rise. the boj said its offering price would be slightly lower than prevailing prices on those bonds. a boj official said the offer was meant to send a signal that the central bank wanted to counter sharp rises in short- and midterm yields. the bank said later that no financial firms offered to sell japanese government bonds at fixed rates on thursday. <u+201c>because the rates were fixed at higher than market levels, it<u+2019>s natural that nobody wanted to sell, considering market principles,<u+201d> said deutsche securities strategist makoto yamashita. the boj<u+2019>s action, however, was likely to have <u+201c>announcement effects<u+201d> by telling the markets that the bank would intervene to stop sharp rises in the shorter-end of the yield curve, and the message now seems to be received by the markets, he said. <u+2014>takashi nakamichi and hiroyuki kachi contributed to this article. write to megumi fujikawa at megumi.fujikawa@wsj.com
bank of japan surprises with plan to buy unlimited jgbs at fixed rates - wsj
megumi fujikawa