Fed’s rate pause puts pressure on BoJ

dollar-yen-japan
The dollar-yen exchange rate could become problematic for the BoJ

The Federal Reserve’s abrupt end to interest rate hikes could complicate the Bank of Japan’s (BoJ) efforts to boost inflation, as lower US Treasury yields threaten to pull Japanese government bond (JGB) yields lower and a stronger yen pushes down on prices.

The BoJ will have to slow its JGB purchases if bond yields are under downward pressure, as the Japanese central bank struggles to hit a yield target of around 0% for the 10-year JGB, Harvinder Kalirai, chief fixed income and currency

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