Bank of Japan September monetary policy meeting announcement

  • Keeps negative rate unchanged
  • To expand monetary base until inflation stable above 2%
  • To modify its policy framework
  • Adopts QQE with yield curve control
  • To keep buying JGBs so balance of its holdings increases at annual pace of 80 trln yen
  • Introduces new market ops for yield curve control
  • Depending on market conditions may set JGB purchase size per auction to fixed amount or unlimited amount
  • Purchasing yields will be set per auction by indicating the spread from the benchmark yield which BOJ determines separately
  • Makes amendment to ETF purchases
  • Decides to set target for long term interest rates
  • Maintains -0.1 pct negative interest rate
  • To abandon monetary base target
  • Says no official base money target, but maintains annual pace of JGB buying at 80 trln yen
  • To buy JGBs so 10 yr yield hovers around 0 pct
  • Scraps range for duration of JGBs that BOJ buys
  • Adopts commitment to let inflation overshoot above 2 pct
  • BOJ can cut short term policy rate, target level of long term rates in future easing
  • BOJ may accelerate expansion of monetary base as future policy option
  • BOJ to continue expanding monetary base until CPI exceeds 2% and stays above target in stable manner
  • Pace of monetary base increase may fluctuate in short run under market op that aims to control yield curve
  • Ready to conduct fixed rate JGB buying ops for 10-yr, 20-yr JGBs in case interest rates spike
  • To make yield curve control a centrepiece of its new policy framework
  • Maintains commitment to achieve 2% inflation at earliest date possible
  • Adopted new policy framework with view that further rise in inflation expectations may take time

There are plenty of new initiatives from the Bank of Japan here. I don;lt really see a big announcement in that lot, but all together it seems the bank does not accept it is out of options.

For the time being, as I update a few minutes after the announcement, USD/JPY is a little higher. Meanwhile on the Japanese stock exchange bank stocks are a lot higher, up more than 5% and change.

more to come