MNI BRIEF: BOJ To Watch JGB Short-end Impacts - Ueda

The Bank of Japan must remain attentive to the risk that rising yields on super-long Japanese government bonds (JGBs) could spill over to medium- and short-term yields, which more directly influence the economy, Governor Kazuo Ueda told lawmakers Wednesday.

BOJ analysis shows medium- and short-term interest rates have a greater economic impact than long-term ones, he said, noting that the Bank is closely monitoring market developments and their implications for the economy.

Super-long JGB yields have climbed recently, driven by concerns over worsening fiscal conditions and supply-demand imbalances in the bond market. (See MNI INTERVIEW: BOJ's JGB Reduction Pace Vital - Yamamoto)

Market participants are now focused on the BOJ’s June 16-17 meeting, where the bank will conduct an interim assessment of its JGB purchase tapering. The policy rate is widely expected to remain unchanged at 0.50%.