BOJ faces call to release handbrake, let longer yields rise

Tokyo

THE Bank of Japan is caught in a quandary. To let bond yields rise or not.

Governor Haruhiko Kuroda wants to make longer-maturity debt more attractive by letting yields move higher, yet doing so will put pressure on his efforts to keep 10-year borrowing costs close to zero.

He will eventually have to raise the target rate, say fund managers including Sumitomo Mitsui Asset Management Co, AllianceBernstein Japan Ltd, MassMutual Life Insurance and Daiwa SB Investments Ltd.

"As the BOJ gets closer to achieving its inflation target, it will face the need to either change the 10-year target or expand the range," said Jun Fukashiro, a senior fund manager at Sumitomo Mitsui Ass…