Traders on Alert for Another BOJ Shock

The Bank of Japan (BOJ) is adjusting its yield curve control tool, a key part of its monetary policy, without prior signals. Governor Prota describes this as a minor tweak rather than a step towards policy normalization. The global rise in bond yields is seen as a factor influencing BOJ's decision. Economists predict that BOJ might raise its yield curve ceiling and inflation forecast, signaling a move towards normalization. Despite differing opinions, there is consensus that BOJ is on the path to policy normalization, with significant steps expected after a new governor takes charge.

What was Governor Prota's stance on the recent adjustment to the YCC policy?

• It was a reversal of previous policies.

• It was a major step towards policy normalization.

• It was a minor tweak, not a step towards normalization.

• It was an unexpected move without any prior discussion.

What global trend has influenced the BoJ to consider widening the YCC band?

• Central bank tightening pushing up bond yields.

• Decreasing inflation rates worldwide.

• Increased foreign investments in Japan.

• A global recession.

What might the BoJ do instead of widening the YCC further?

• Lower the inflation forecast for 2023.

• Raise the inflation forecast to 2%.

• Introduce a new monetary policy tool.

• Decrease the YCC ceiling.

When are significant steps towards BoJ's policy normalization expected?

• Not until 2025.

• Immediately after the next policy meeting.

• After a new governor takes charge in April.

• Before the end of the current governor's tenure.

What is the expected inflation forecast for 2023 that might signal a shift in BoJ's policy?

• 2%

• 2.5%

• 1.5%

• 3%