The Bank of Japan‘s ended “yield curve control”, a negative short-term interest rate target, and asset purchases other than government bonds and restored the primacy of its overnight rate — now 0-0.1% — as its primary policy tool. These changes were justified by the greater-than-expected 5% wage increases that came out of this year’s spring labor negotiations. The goal of core inflation somewhat above 2.0% had been already established for some time, but officials had resisted changing the policy stance until a sign of a developing and sustaining virtuous wage-price cycle emerged. Two press statements were released ... (full story)