On Monday (March 11) news that the Bank of Japan may end its yield curve control strategy early next week, the Japanese stock market fell sharply, while the yen continued to close to a month high。The Nikkei 225 index fell as much as 2 percent in early trading, while the yen gained 0 percent against the dollar..2%, remaining near the one-month high set last week。

Media reports that the Bank of Japan is close to halting its ultra-loose negative interest rate and yield curve management policies may make a decision at next week's meeting。With payrolls expected to rise sharply this year, policymakers are considering the move, which would be the first rate hike by the central bank since 2007.。

A revision of the day's gross domestic product (GDP) data showed that the Japanese economy avoided a technical recession in the fourth quarter, adding to concerns about an early shift by the Bank of Japan, and that pressure on the Japanese economy could allow the central bank to tighten policy further.。

The timing of the hike will be tough to decide between a March 18-19 meeting and an April 25-26 meeting, and officials will be keeping a close eye on annual pay talks between major businesses and labor groups.。

Higher wages are expected to prompt more immediate action by the BoJ, as it signals stronger consumption and more persistent inflation in the coming months, both of which are important variables for the BoJ as it considers policy shifts.。

Any policy tightening by the Bank of Japan would end the ultra-loose policies and stimulus measures that Japanese industries have enjoyed for nearly a decade.。

The central bank's dovish stance was an important driving force behind the Nikkei's sharp surge in 2023 and early 2024, when the index hit a record high of more than 40,000 points.。The central bank's policy shift will also further support the yen, with the spread between Japanese and U.S. interest rates widening over the past two years.。The yen fluctuated around 146 to the dollar on Monday。