Yield Curve Control – the road to infinite QE
- The BoJ unveiled their latest unconventional monetary policy on 21st September
- In order to target 10 year yields QE must be capable of being infinite
- Infinite Japanese government borrowing at zero cost will eventually prove inflationary
- The financial markets have yet to test the BoJ’s resolve but they will
Zero Yield 10 year
Ever since central banks embarked on quantitative easing (QE) they were effectively taking control of their domestic government yield curves. Of course this was de facto. Now, in Japan, it has finally been declared de jure since the Bank of Japan (BoJ) announced the (not so) new policy of “Yield Curve Control”.
New Framework for Strengthening Monetary Easing: "Quantitative and Qualitative Monetary Easing with Yield Curve Control", published on 21st September, is a tacit admission that BoJ intervention in the Japanese Government Bond market (JGB) is effectively unlimited. This is how they described it (the emphasis is mine):-
To read the entire report Please click on the pdf File Below..