JGBs jump after BoJ remains steady in monetary policy decision; flexible on future rates depending on economic conditions

The Japanese government bonds jumped Tuesday after the Bank of Japan (BoJ) remained on hold at its monetary policy decision, unveiled early today but decided to remain flexible on interest rates, depending on the economic situation.

According to a report from Nikkei, however, the BoJ is unlikely to consider an adoption of policy tightening at its upcoming meeting, based on views of five key central bank watchers.

The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, slumped 1-1/2 basis points to 0.06 percent, the yield on the long-term 30-year plunged nearly 6 basis points to 0.77 percent and the yield on short-term 3-year remained close to 1/2 basis point lower at -0.10 percent by 05:25GMT.

The BoJ undertook measures to make its monetary policy framework more flexible, although pledging to keep interest rates low for a long period of time, but said that rates can rise or fall, depending on the economic health of the country.

The noted changes show that Governor Haruhiko Kuroda plans to stick to a radical stimulus programme as of now, but will keep a close eye on how the other economies react to the changes in policies, Reuters reported.

Meanwhile, the Nikkei 225 index rose 0.12 percent to 22,570.00 at 05:30, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained highly bearish at -109.89 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex