GBPJPY Ueda faces risk of market collapse as Bank of Japan weigh

Mr. Kazuo Ueda of the Bank of Japan is in a predicament. If he sticks to policy this week, there is a risk that the yen will fall to a 10-year low and the yield control program will come under attack from speculative markets.

If the Governor simultaneously raises the upper limit of 10-year yield curve control, either explicitly or implicitly, the Governor could raise long-term interest rates to levels that are inconsistent with economic fundamentals, which is the Governor's goal. The achievement of stable inflation would be at risk.

In a sign of how tense the monetary policy debate will be, BOJ officials are likely to monitor developments in yields right before deciding whether to adjust the YCC, the people said.