(Bloomberg) -- Bank of Japan officials see several reasons against intervening in the bond market even after benchmark yields hit the highest level since 2008, according to people familiar with the matter, elaborating on the thinking behind recent remarks from Governor Kazuo Ueda.

Speaking in parliament Wednesday, Ueda indicated he has little problem with the recent rising yield trend, as it reflects the market’s view on Japan’s economy and inflation and shifts in interest rates overseas. The BOJ is broadly aligned with those views, he said.

Officials are determined not to step into the market unless extreme moves take place, for fear of creating thresholds for traders that would impact market functioning, according to the people. The market should decide rates and investors need to get used to a world without the central bank’s yield curve control after the program ended last year, they said.

Officials view the market as functioning in a healthy fashion without being jostled by speculative trading, the people said. Compared with global counterparts, the extent of the recent market moves also don’t strike them as abnormal, they said.

Those views suggest the bar for stepping into the market has gotten higher, even though the BOJ’s official stance is the same as it was before the yield curve control program was scrapped in March last year — that they will step into the market if there are disorderly moves. Ueda made similar comments Wednesday to signal the official line hasn’t changed.

At the same time, there is a growing view among investors that the BOJ’s terminal rate may be higher than previously expected, a stance that has triggered the clearest rise in yields since the central bank stopped controlling Japan’s yield curve.

Japan’s benchmark 10-year yields hit 1.575% Monday, the highest level since 2008, while on Wednesday morning the 20-year bond yield also rose to a similar benchmark. The same day, yields on 30-year debt climbed to the highest since 2006.

In the background, officials are well aware that any direct action or indication of action would mean traders will mark the yield level at that time as a threshold, impacting market functioning. For similar concerns over market functioning, officials see fixed-rate operations as a likely last resort given the strong messaging it gives for yield levels, people with knowledge of the matter said.

If the BOJ judges that it needs to intervene in bond markets, the bank could indicate a heightened sense of urgency through different means first before taking direct action, including changing the tone of Ueda’s comments or tweaking its monthly bond buying plan, the people said.

Despite bond yields climbing to multi-decade highs, volatility in Japan’s rates market has also stayed much lower than it has in other major markets amid the BOJ’s still sizable bond purchases and measured pace of policy tightening.

Three-month option-implied volatility of Japanese 10-year overnight-indexed swaps derivatives that reflect volatility in the nation’s bond market stands at about 50 basis points, half the level of the US equivalent and also lower than the eurozone’s 85 basis points.

The governor last month said that the bank would take action in “exceptional cases.” There is no commonly shared definition among BOJ officials on what makes certain situations “exceptional,” but a clear market meltdown could warrant action, the people said.

The BOJ still holds about half of Japan’s debt market. Central bank officials will be closely monitoring if financial conditions become restrictive or the stable formation of yields is hampered in the bond market, the people said.

--With assistance from Masaki Kondo.