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Economics
Yield Curve Control
When a central bank targets specific yields on government bonds to keep long-term interest rates low.
Yield curve control is a form of unconventional monetary policy. It is more direct than quantitative easing because the central bank commits to a specific yield target. It can keep borrowing costs low for governments and businesses.
It's the central bank drawing a line on the chart and saying 'this is the interest rate we want — we'll buy as many bonds as needed to keep it there'.
Real world: The Bank of Japan has used yield curve control to keep 10-year Japanese government bond yields near zero for years. The Australian central bank also used it during COVID.
💡 Yield curve control is the central bank's way of directly pinning down long-term interest rates.