Bank of Japan Meets With Focus on Yen, Ueda’s View on Rates

At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided upon the following. (1) Yield curve control: a) The Bank decided, by a unanimous vote, to set the following guideline for market operations for the intermeeting period. The short-term policy interest rate: The Bank will apply a negative interest rate of minus 0. 1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank. The long-term interest rate: The Bank will purchase a necessary amount of Japanese government bonds (JGBs) without setting an upper limit so that 10-year JGB yields will remain at around zero percent. b) Conduct of yield curve control (a unanimous vote) The Bank will continue to allow 10-year JGB yields to fluctuate in the range of around plus and minus 0.5 percentage points from the target level, while it will conduct yield curve control with greater flexibility, regarding the upper and lower bounds of the range as references, not as rigid limits, in its market operations. The Bank will offer to purchase 10-year JGBs at 1,0 percent every business day through fixed-rate purchase operations, unless it is highly likely that no bids will be submitted.' n order to encourage the formation of a yield curve that is consistent with the above guideline for market operations, the Bank will continue with large-scale JGB purchases and make nimble responses for each maturity by, for example, increasing the amount of JGB purchases and conducting fixed-rate purchase operations and the Funds-Supplying Operations against Pooled Collateral. post: BoJ Leaves Forward Guidance Unchanged - Will Add To Easing Without Hesitation If Needed - Will Nimbly Respond To Prices, Economy, Financial Conditions - Y/Y Rate Of CPI Increase Likely To Decelerate - Inflation Expectations Showing Renewed Signs Of AcceleratingBank of Japan leaves rates unchanged, maintaining ultra-loose monetary policy Japan’s central bank maintained its ultra-loose policy and left rates unchanged on Friday, mindful of the “extremely high uncertainties” on the growth outlook domestically and globally. In a policy statement after its September policy meeting, the Bank of Japan said it would maintain short-term interest rates at -0.1%, and cap the 10-year Japanese government bond yield around zero. At the last policy meeting in July, the Bank of Japan loosened its yield curve control to allow longer term rates to move more in tandem with rising inflation. It was Ueda’s first policy change since assuming office in April. The move to broaden the permissible range for 10-year JGB yields of around plus and minus 0.5 percentage points from its 0% target to 1% was seen as the start of a gradual departure from the yield curve control policy enacted by Ueda’s predecessor. Many economists brought forward thUSD/JPY reclaims 148.00 in reaction to BoJ's decision to maintain status quo The USD/JPY pair regains positive traction during the Asian session on Friday and the buying interest picks up pace after the Bank of Japan (BoJ) announced its policy decision. Spot prices climb back above the 148.00 mark in the last hour and remain well within the striking distance of the YTD peak touched on Thursday. The Japanese central bank, as was widely anticipated, decided to leave its monetary policy settings unchanged and fell short of offering any forward guidance. This marks a big divergence in comparison to the Federal Reserve's (Fed) hawkish outlook, which continues to underpin the US Dollar (USD) and acts as a tailwind for the USD/JPY pair. The Fed signalled the possibility of at least one more rate hike by the end of this year and the updated projections show significantly tighter rates through 2024 than previously expected.