BoJ: No Change, & USDJPY longs worth considering


The Bank of Japan remains a very boring central bank to follow with very little in terms of change. This last meeting was no exception and rates were kept at -0.10% and the 10 year bond yield target also kept at 0.0%. The only dissenter was Mr Katoaka who said that it was desirable to further strengthen monetary easing by lowering short and long-term interest rates, with a view to encouraging firms to make active business fixed investment for the post-COVID-19 era. For years Japan has struggled to see any inflation, so with inflation rising around the world it was interesting to see that the BoJ expect consumer inflation to remain around 0% for the time being.


The growth outlook for real GDP was tweaked a little with the 2021 median forecast being reduced from 3.8% to 4.0%. However, the 2022 forecast was revised higher to 2.7% from 2.4% and the 2023 median forecast unchanged at 1.3%.

Core inflation

The rise in energy prices was cited as the reason for the core CPI increases. 2021’s forecast was revised up to 0.6% from 0.1% and the 2022 forecast up to 0.9% from 0.8%. 2023’s forecast was unchanged.

Climate change

The Bank announced that it would introduce a new fund-provisioning measure to support private financial institutions’ various efforts in fields related to climate change. These may include (1) green loans/bonds, (2) sustainability-linked loans/bonds with performance targets related to efforts on climate change, and (3) transition finance


The recent pullback in US 10 year bonds has been a puzzle. However, longer term the Fed will move before the BoJ. It may only take one goods job report from the US. So, look for decent areas of support for medium term USDJY buying and just check the US 10 year yields keep moving higher…

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