(Bloomberg) -- The Bank of Japan ramped up the defense of its policy framework Tuesday after yields came under renewed upward pressure, unveiling a further set of unscheduled buying operations, including purchases of much longer maturities.

The central bank boosted scheduled purchases of five-to-10-year debt after the benchmark yield failed to come down from 0.255% -- above the upper end of its 0.25% tolerance band. It announced an unscheduled operation to buy longer-dated debt after the 30-year yield surged to 1.28% -- the highest since 2016.

The jacked-up moves reflect the BOJ’s commitment to protect its yield-curve control policy even if it prompts further slides in the yen as the Federal Reserve accelerates its rate hike pace. Worse-than-expected inflation data from the US has been a catalyst behind the global market rout this week.

Governor Haruhiko Kuroda insists it’s too early for Japan to step back from keeping rates ultra low, with the economy still recovering from the pandemic and inflation stemming largely from higher energy prices. The vast majority of surveyed economists expect the bank to stick with its policy settings this week.

Still, as the pressure continues to build on the BOJ’s easing framework, speculation smolders on that changes will have to come eventually. 

“There’s growing market concern over possible adjustments in yield curve control given the yen is weakening so rapidly,” said Hiroshi Miyazaki, senior economist at Mizuho Research & Technologies. “The BOJ is likely to be able to keep yields low for 10-year yields, but it remains to be seen whether it can control longer maturities.”

The central bank also expanded its plans for Wednesday across five tenors, including purchases of debt maturing in 10 to over 25 years. Longer-dated debt lies outside its yield-curve control policy and is particularly vulnerable to bond-market volatility.

“The BOJ has come to the rescue to halt the rise in super-long yields,” said Katsutoshi Inadome, a strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “It will still depend on how much more US yields climb, but BOJ’s actions will provide support to some extent.”

Longer-dated yields retreated after the BOJ’s announcements, while the benchmark bond traded at its tolerated limit of 0.25%.

Data from the bank showed that it bought a record amount of 2.2 trillion yen ($16.3 billion) of bonds through their fixed-rate operation Tuesday, surpassing the previous high hit in 2018. 

Japan’s central bank is faced with a growing headache in defending its easy-monetary policy as the rest of the world moves on to hiking interest rates, resulting in the yen slumping to a 24-year low. Following the announcement that the BOJ will be boosting buying Wednesday, the yen softened from around 134.20 against the dollar to 134.82.

“It’s awkward for the BOJ because their strong actions on capping yields adds to yen weakening pressure,” said Mizuho’s Miyazaki. “In a way, they are seen as a root cause of the problem.”

Ten-year yen swap rates -- a market popular with international funds -- have surged, breaking their close relationship with domestically driven yields. At over 0.50%, the former have pushed well past the central bank’s 0.25% ‘line in the sand’ for benchmark bonds, suggesting foreign traders believe higher yields and a policy change in Japan are inevitable.

Still, Kuroda has continued to remind parliament this week that monetary easing needs to remain, even as he expressed concerns over the recent rapid yen moves. 

The BOJ meets this week to decide policy and is widely expected to keep its main settings on hold, despite the pressure on both the currency and the central bank’s cap on yields. Most economists expect the central bank to continue to stick with its position unless the yen breaches the 140 level against the dollar. 

BOJ to Stand Pat Unless Yen Breaches 140, Polled Economists Say

“The current rise in JGB yields appears to be more than a reflection of US yields’ advance, and if this is seen by the BOJ as a challenge to yield-curve control, unscheduled purchases of super-long bonds in the afternoon is quite possible,” said Ataru Okumura, a strategist at SMBC Nikko Securities in Tokyo. “I don’t think the BOJ will dent under market pressure and make tweaks at this week’s meeting because that will risk it lose the controlability of yields.”

(Updates with details on record daily bond purchases)

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