The Bank of Japan July monetary policy decision

Headlines via Reuters:

  • BOJ MAINTAINS LONG-TERM YIELD TARGET AROUND ZERO PCT, MAKES ITS POLICY FRAMEWORK MORE FLEXIBLE
  • BOJ MAINTAINS SHORT-TERM INTEREST RATE TARGET AT -0.1 PCT
  • BOJ CHANGES PLEDGE ON LONG-TERM YIELD TARGET
  • BOJ: ADOPTS FORWARD GUIDANCE ON POLICY RATES
  • BOJ: WILL MAINTAIN VERY LOW RATE LEVELS FOR EXTENDED PERIOD OF TIME
  • BOJ: LONG-TERM RATES MAY MOVE UPWARDS AND DOWNWARDS TO SOME EXTENT DEPENDING ON ECON, PRICE DEVELOPMENTS
  • BOJ: WILL CONDUCT JGB BUYING IN FLEXIBLE MANNER SO OUTSTANDING AMOUNT WILL INCREASE AT ANNUAL PACE OF AROUND 80 TRLN YEN
  • BOJ: WILL MAINTAIN VERY LOW RATE LEVELS TAKING INTO ACCOUNT ECONOMIC, PRICE UNCERTAINTIES INCLUDING NEXT YEAR'S SALES TAX HIKE

More:

  • ETF, REIT buying amount may fluctuate depending on market conditions
  • Decided to take steps to decrease balance of reserves for which negative rates are applied
  • Decided to adopt forward guidance for policy rates to enhance sustainability of its policy framework
  • Forward guidance aimed at conducting market ops, asset-buying in more flexible manner
  • These steps will help hit price target at earliest possible time while securing econ, financial condition stability
  • Will examine risks considered most relevant to conduct of monetary policy, make policy adjustments as appropriate
  • Will jgbs promptly and appropriately in event of rapid increase in yields
  • Board members Harada, Kataoka opposed decision on yield curve control
  • Decision on asset buying made by unanimous vote

The yen weakened a touch on the announcement. From just under 111.00 to circa 111.40. The press conference from Governor Kuroda is at 0630GMT. There will be plenty of questions! One which springs to mind is what sort of flexibility will be allowed in 10 year yields. And there will be plenty more.

Stay tuned ladies and gentlemen - Dane is about to jump on to take you through Europe/UK and responses in the yen.

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For background to this: