Bank of Japan crafts new weapon to defend yield control policy

TOKYO  – The Bank of Japan on Wednesday amended rules for a fund-supply market operation to use it as a new tool to prevent long-term interest rates from rising too much, in a show of its resolve to maintain yield curve control (YCC) for the time being.

Under the amended rules, the central bank can offer funds of up to 10 years against collateral to financial institutions for both fixed- and variable-rate loans.

After announcing the new rules, the BOJ said it will offer five-year loans under the fund-supply operation with a duration of between Jan. 24, 2023 and Jan. 24, 2028.