Jury Still Out on Japan Yield-Curve Control, Fed Economists Find

The Bank of Japan’s use of yield-curve control since 2016 has helped it manage long-term bond yields without the need for massive asset purchases, according to economists at the New York Fed, but the country’s inflation rate still remains too low.

“Has YCC been a success? Seemingly not on the inflation front, at least thus far,” Matthew Higgins and Thomas Klitgaard wrote in a blog posted Monday on the New York Fed’s website. “Core inflation has been running near 0.5% in recent months, barely higher than when the policy was adopted. The challenge for the BoJ is that expectations for persistently low inflation are entrenched.”