BOJ with their latest monetary policy decision - 16 March 2020
- Policy rate maintained at -0.10%
- 10-year JGB yields target maintained at about 0%
- Increases annual pace of ETF purchases to ¥12 trillion (previously ¥6 trillion)
- Introduces new lending programe to smooth funding for firms
- Strengthens stance on asset purchases
- To purchase more commercial paper, corporate bonds
- 7-2 vote on yield curve control decision (Kataoka, Harada dissented)
- BOJ says will take additional easing measures as needed
It looks like the BOJ took a leaf out of the ECB playbook and kept rates unchanged while focusing on liquidity measures instead i.e. increase in ETF purchases and to provide more funding for firms impacted by the coronavirus outbreak.
The yen has weakened slightly as the Nikkei got a jolt higher, before giving up those gains quickly to stay near flat levels now:
Ultimately, I see this as a move that is a bit disappointing to the rates market - much like the ECB - and the fact that the BOJ does not move on its 10-year JGB yields target may also be a decision that could come back and haunt them.
For the yen, not much weakness is expected as the BOJ kept rates unchanged but if the market views this as disappointing, it could strengthen rather strongly once the dust settles.
