The Bank of Japan Makes A Second Big Error

The reported September ‘major rethinking’ of Japanese monetary policy is an error that will add risk to markets. That is not to say that the previous BoJ move to push policy rates into negative territory was any better. Fundamentally, the BoJ’s recent actions confirm that policy-makers do not understand the yield curve. The end result will be higher Japanese bond yields, a steeper yield curve and a stronger Yen.