JGBs close mixed after BoJ pledges to keep interest rate ultra-low, inflation target seems far-fetched

The Japanese government bonds remained mixed at the time of closing Thursday after the Bank of Japan (BoJ) pledged to keep the benchmark interest rate at an ultra-low level at least around the spring of 2020, amid ongoing negative side effects of stimulus.

Further, a change to forward guidance was predicted by only 3 of 48 economists surveyed by Bloomberg. The central bank now projects that it won’t hit its 2 percent inflation target at least through March 2022, which will be nine years since Governor Haruhiko Kuroda launched its radical program to reflate prices, Bloomberg reported.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged nearly 3-1/2 basis points to -0.032 percent, the yield on the long-term 30-year surged 1-1/2 basis points to 0.574 percent and the yield on short-term 2-year remained flat at -0.148 percent by 06:10GMT.

Further, the report noted that the outlook for the BoJ is a worrying sign for some of its global peers, who are struggling with their own stubbornly low inflation and facing talk of "Japanification."

"A growing number of economists say more monetary easing of some type will be forthcoming. Nearly half of economists now expect the next policy move by the BOJ will be more monetary easing, up from 14 percent in December," the report added.

Meanwhile, the Nikkei 225 index closed 0.60 percent higher at 22,316.50, while at 06:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 66.78 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex