Yikes! Bank of Japan, the lone dove just turned into a Hawk?

News just came in that bank of Japan has adjusted their yield control curve for their 10 years bonds from 0.25%-0.5%

This is to say that they will allow their 10 years bonds yield to be between 0-0.5%

The increase in this curve is quite similar to an interest rate increase as older 10 years bonds will see their bond price falling due to becoming unattractive to investors which shows the inverse relationship between interest rate and bond prices

Is BOJ a Hawk now?

Although BOJ increasing the yield curve control is a hawkish sign, signaling and acknowledging the rising cost that is happening, I don't think it has turn into a hawk yet.

The short term interest rate is still - 0.1% and the yield curve control is just giving themselves more space to move in case rising cost ran out of control.

Market response

The market of course take this news badly as BOJ has known to be the lonesome dove with stock market futures falling and yen gaining traction.

Thoughts

This just show how serious inflation is and it is not just affecting the US with many other countries experiencing the same or even wors, suffering from high inflation environment. 

Central polices takes time to see the effect, and each decision to bring down inflation will ultimately hurt the economy.

Seems like we might see more short term pain and 2023 might be similar to 2022 as well or even worse see lower lows

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