Is reverse ‘Operation Twist’ on cards for BOJ?

According to analysts at Evercore ISI, the Bank of Japan (BOJ) is likely to make change in its stimulus program to alleviate risks from ultra-low long-term yields.

Guha and Tedeschi, Analysts at Evercore ISI noted, “The BOJ’s policy review will point to a rebalancing of its monetary policy aimed at maintaining or increasing downward pressure on short-to-medium term real interest rates (and in turn put downward pressure on the yen) while engineering a steepening of the yield curve.” 

By steepening the yield curve, the BOJ would be mounting a “reverse Operation Twist,” the Washington-based analysts added.