In order to achieve the price stability target at the earliest possible time, the Bank set the target level of 10-year Japanese government bond (JGB) yields at around zero percent, and has purchased large amount of JGBs so that the yield curve would be formed in line with the target.
As this reduction has narrowed the gaps between the interest rates paid on the different categories of short-term deposits, it has fostered shifts in the allocation of funds. For example, the demand for overnight deposits further strengthened in February and contributed to the rise in the annual growth rate of M1 to 6.3%, while the demand for short-term time deposits weakened considerably.