Economics
Central Banks Turn to Japan for Yield Curve Control Lessons
- RBA decided to target borrowing costs, not quantities bought
- Fed’s Brainard previously discussed curve control for U.S.
A Japanese national flag flies outside the Bank of Japan headquarters in Tokyo.
Photographer: Toru Hanai/BloombergThis article is for subscribers only.
As central banks around the world reignite quantitative easing programs or adopt them for the first time, Japan’s key focus of controlling bond yields rather than a quota of purchases is being explored.
When the Reserve Bank of Australia broke the emergency glass on March 19, it set a target for the yield on three-year Australian government bonds of around 0.25%, in line with its benchmark policy rate that was lowered to this level.