BOJ reportedly may revamp guidance on ETF purchases as part of March policy review

Author: Justin Low | Category: Central Banks

Reuters reports on the matter


The report says that there is an idea being floated within the BOJ that policymakers may replace numerical guidelines on ETF purchases with a pledge to ramp up buying when markets become volatile instead, citing three sources familiar with its thinking.
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Adding that such a move would allow the BOJ to be more flexible when slowing purchases as markets become more stable, while reassuring investors that the central bank will still step in forcefully when there are shocks taking place in markets.

This could really work both ways. If the BOJ wants to scale back and not want to risk a tantrum in the Japanese stock market, the lack of transparency affords them the ability to do that quietly over time.

On the flip side, if they want to steer clear of any unwanted pressures that they are causing an asset bubble, this also works in their favour.

As things stand now, I reckon it is more to do with the latter than the former.

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