• Short-term policy rate at around 0.00% to 0.10%
  • Voting majority of 7-2 on interest rates (Asahi and Toyoaki dissented)
  • Prior -0.10%
  • Upper bound of 1% on 10-year JGB yields removed i.e. yield curve control scrapped
  • To continue JGB purchases with broadly same amount as before
  • In case of rapid rise in yields, BOJ will make nimble response such as increasing JGB purchases
  • Voting majority of 8-1 on JGB purchases (Toyoaki dissented)
  • To discontinue purchases of ETFs and J-REITs
  • To gradually reduce corporate bond purchases and discontinue them in about on year
  • Voting was unanimous on discontinuing ETF purchases
  • Japanese economy has recovered moderately, although some weakness has been seen in part
  • It is highly likely wages will continue to increase steadily this year
  • Virtuous cycle between wages and prices has become more solid amid recent data
  • BOJ judges it came in sight that price stability target would be achieved in a sustainable and stable manner towards the end of the projection period as outlined in January outlook report
  • Full statement

Sell the fact. That seems to be the response from the Japanese yen over the last two weeks or so. USD/JPY has risen up from around 149.30 before the decision to 149.80 now. As mentioned here yesterday, it is going to take more than just the BOJ to really get the yen propped up at the moment.

As for the policy decision itself, this is mostly expected after the many, many reports that we have gotten over the last one week. Traders have had plenty of time to adjust to this new reality but it is still one for the history books. If not for the pandemic, I'd thought we would never see this day.

There will be much larger ramifications in the long run as Japan moves away from negative interest rates. But given that the BOJ is likely to take very slow and gradual steps in normalising monetary policy, the waves should be rather controlled. The end of yield curve control is also significant but bond-buying operations are still in place, so it isn't to say that it is a total exit from easy policy.

Besides that, they also don't offer any future guidance on normalising policy further. And that to me reads as they are going to take things very slow.