- The Bank of Japan (BoJ) maintained its yield curve control policy with the short-term and 10y JGB targets of -0.1% and 0%.
- The policy review basically brings three new decisions:
- The BoJ will introduce an “Interest Scheme to Promote Lending” which enables the bank to cut interest rates while mitigating its negative side effects.
- It widens the band in which 10y-JGB yields can fluctuate from 20 bps to 25 bps.
- The bank will purchase ETFs and J-REITs only when necessary with an upper annual limit of JPY 12 tr resp. JPY 180 bn.
- The new measures look to add more flexibility to the BoJ policy options but we consider the hurdles for a fundamental change in interest rate policy still as substantial..