Japan to Change Yield Curve Control Policy in June, Says Largest Insurance Company

According to the latest forecast of Nippon Life Insurance Co., the Bank of Japan (BOJ) will adjust the yield curve control (YCC) policy in June this year.

Japan's largest insurance company will accelerate the purchase of Japanese government bonds when the central bank adjusts its policy, according to the annual allocation plan.

Last week, another Japanese life-insurance giant, Fukoku Life Insurance Co., formulated a similar investment strategy for the fiscal year.

On Monday (April 24), Akira Tsuzuki, head of the Financial and Investment Planning Department of Nippon Life Insurance, told the media that the BOJ will raise the upper limit of the fluctuation range of the 10-year government bond yield from 0.5% to 1% to ease the pressure on Japan's dysfunctional bond market.

Tsuzuki added that the current 30-year Japanese bond yieds of about 1.3% is not an attractive level, "We plan to buy bonds slowly as interest rates rise, and yields of about 1.5% and closer to 2% will be very attractive."

During the day, Kazuo Ueda, the new governor of the BOJ, said that when it is foreseeable that the inflation rate will tend to reach 2%, it is necessary to move towards policy normalisation.

Later this week, the bank will hold a monetary policy meeting, after which it will release new growth and inflation forecasts, the first policy decision since Kazuo Ueda took office.

Japanese media reported on Sunday that the bank plans to review the policy assessments adopted over the past few decades at the meeting to study the causes of Japan's economic stagnation so that the central bank can propose effective policies under Kazuo Ueda.

Last week, Adrian Zuercher, head of global asset allocation at UBS, said in an interview that the yen may appreciate by 10% against the dollar in the next few months, and "technically it may far exceed this level."