The Bank of Japan (BOJ) announced on Monday that it will once again be issuing five-year loans backed by collateral to financial institutions, in an effort to address the rising bond yields. This marks the second time that the BOJ has made such an offer and comes after the bank accelerated its funding program this month to protect its bond yield control policy.
According to the BOJ, the central bank will launch a new round of funding next Tuesday, with the five-year loan set to start on February 1st. The announcement was made on Tuesday as well.
The move by the BOJ comes after the yield on 10-year Japanese government bonds rose to nearly 0.5%, which is close to the ceiling set by the BOJ. This increase in yield is partly attributed to Tokyo’s core consumer inflation reaching its highest level in nearly 42 years at 4.3% in January.