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Macro & Economy

Yield Curve Control

Also called: YCC, yield curve targeting

Yield curve control targets a specific yield at a chosen maturity, with the central bank pledging to buy however many bonds it takes to hold the line. Where QE fixes a quantity, YCC fixes a price and lets quantity float. Japan ran it for years; the risk it demonstrates is that defending a peg against a market that stops believing it can require unlimited purchases, and exiting is disorderly.

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