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The Bank of Japan has retained its overall policy framework despite a global tide of monetary tightening by the Federal Reserve and despite speculation that it could adjust one of its rate targets to mitigate the negative effects of the Fed's policy. Prolonged relaxation. Bankers have said that low rates everywhere have reduced their profits.
Japanese government bonds rose and the yen fell when the decision was announced. State bond yields at 10 years reached 0.122% before the announcement, a recent peak, before falling back to 0.06%. The Bank of Japan has intervened several times in the market by offering to buy 10-year bonds in order to maintain the yield at more than 0.1%.
The US dollar rose slightly against the yen after the decision.
The BOJ's nine-member board of directors voted 7-2 to maintain a key short-term interest rate of 0.1% and maintain its zero return target. Japanese state bonds at 10 years old. According to the BOJ, "Returns can go up and down to a certain extent, mainly depending on the evolution of economic activity and prices."
These are modest concerns expressed by some bankers and bond market participants. the side effects of central bank policies. Bond market participants say that strict rate control has reduced the volume of transactions and harmed market functions.
But overall, the statement of the Bank of Japan aimed more aggressively to achieve the 2% inflation target.
He put in place a "forward guidance" for key rates, saying that he "intends to maintain the current extremely low levels of short-term interest rates and to long term for an extended period of time. "
The central bank reiterated that it wants to achieve 2% inflation as soon as possible. Underlying inflation – all prices excluding fresh food – was 0.8% in June.
She would continue to buy government bonds at an annual rate of about 80 trillion yen ($ 720 billion). The commitment to easing, although the actual pace of JGB purchases fell to 43 trillion yen over the last 12-month period.
In its quarterly economic outlook, the BOJ reduced its projection of core inflation. I will not reach the bank's target of 2% until March 2021 at least.
The bank's board predicts that the core CPI will reach 1.1% for the year ending March 2019, down from the previous forecast of 1.3%. It also reduced its inflation forecast for the year until March 2020 to 1.5% and 1.6% the following year, excluding the impact of the year ahead. 39, a sales tax increase planned for October 2019. The BoJ had anticipated increases of 1.8% for these two years
Speculation about possible policy adjustments increased rapidly last week and pushed the yield 10-year Japanese government bonds above 0.1% for the first time in a year.
The central bank has kept its policy in abeyance since September 2016 current strategy of controlling short-term and long-term rates.
– Mike Bird contributed to this article.
Write to Megumi Fujikawa at [email protected]
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