[Institutions: Increased Volatility in Japanese Bonds and Exchange Rates Poses Policy Dilemma for the Bank of Japan] Jin10 Data, January 26 – DBS Bank Senior Economist Ma Tieying pointed out that the Bank of Japan is facing a dilemma in managing interest rates, capital flows, and exchange rates. If the central bank keeps short-term interest rates unchanged while intervening in the government bond market to stabilize long-term yields, it may need to tolerate a new round of yen depreciation. Therefore, the primary responsibility for stabilizing the yen exchange rate will likely remain with Japan's Ministry of Finance. The Bank of Japan appears ready to intervene in the government bond market to stabilize the situation by increasing bond purchases and other policy tools. The market also has an automatic stabilizing mechanism: if Japanese government bond yields exceed 3%, their attractiveness to Japanese banks and insurance institutions will surpass that of U.S. Treasuries, thereby driving capital back into the domestic bond market, which could help support the yen. The Bank of Japan may raise interest rates as early as April, but it could also delay action until June or July.