BOJ policy review: Drops 6 tln yen ETF buy target, maintains 12tln yen ceiling

Bank of Japan also expands its JGB yield trading band to 25bps (from 20bps)

Both the ETF and JBG band decisions were widely expected.
  • BOJ will establish an interest scheme to promote lending
  • will take more policy action if needed
  • maintains YCC with QQE to achieve 2% inflation target
  • will purchase JGBs without setting an upper limit
  • appropriate to buy ETFs, REIT massively when there is large market destabilisation
  • excessively low superlong yields may be a negative for the economy
  • cutting rates an important option for easing – will adjust 3-tier reserve system if lower rates
  • scheme to mitigate the impact on bank profits when rates cut
  • maintains short-term interest rate target at -0.1%
  • maintains 10 yr target at around 0%
The two main planks of the pilcy decision were flagged for weeks in advance and the Nikkei highlighted the two measures as likely only yesterday. Thus the decisions come as little surprise.
As I post yen is not a lot changed after a minor wobble
Bank of Japan also expands its JGB yield trading band to 25bps (from 20bps)