Is it time to do the twist again?

10-year government bond yields have rebounded this week but are still at the lower end of the BoJ’s tolerance band. Some commentators have suggested that the Bank will cut the short-term policy rate next week to steepen the yield curve. But this week’s developments in the euro-zone, where the ECB cut the deposit rate to -0.5%, underline that even deeply negative short-term interest rates don’t guarantee an upward-sloping yield curve.