TOKYO: Japanese government bond prices slipped on Tuesday after the Bank of Japan refrained from further monetary easing, preferring to spend more time gauging the impact on the economy of its decision in January to adopt negative interest rates.
The benchmark 10-year JGB yield was up 2.5 basis points at minus 0.025 percent.
It has climbed steadily from a record low of minus 0.100 percent following last week's shock statement by European Central Bank President Mario Draghi that the central bank could be done cutting interest rates for now.
The 30-year yield was at 0.710 percent, after sinking to a historical trough of 0.460 percent a week ago.
The BOJ's decision was well anticipated and did not cause a big stir in JGBs, but the market was left to ponder the central bank's shrinking easing options.
"There are views in the market that the 'quantitative' and the 'yield' channels of BOJ's monetary policy are reaching their limits. The BOJ is in a difficult position as yields could rise across the board if it only focuses on the remaining 'qualitative' element when it eases again," said Koya Miyamae, senior economist at SMBC Nikko Securities.
"The BOJ is likely to centre its next easing move on the qualitative element, but it may also try to keep the yield curve under control by also easing in small increments through the quantitative and yield channels," Miyamae said.
As widely expected, the BOJ on Tuesday maintained its massive asset buying programme and its pledge to increase base money at an annual pace of 80 trillion yen ($705 billion).
It also left unchanged a minus 0.1 percent interest rate it applies to some reserves financial institutions keep at the BOJ.
But in a nod to criticism over January's surprise negative rate move, the BOJ removed a line from the statement announcing its policy decision that it will cut interest rates further if necessary.
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