Bank of Japan

September 21, 2017

Following four hours and 52 minutes of deliberation over two days, the Bank of Japan’s nine-person Board agreed to leave policy as is, with a -0.1% marginal short-term interest rate, a target of “around zero percent” in the 10-year JGB sovereign debt yield, and continuing quantitative stimulus for “as long as it is necessary for maintaining that target in a stable manner. It will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds 2 percent and stays above the target in a stable manner.”

During 2016, The BOJ adopted a negative short-term interest rate in January and introduced yield curve control in September of that year. Today’s statement from the Board more or less retains the same economic assessment as at its prior meeting. One important change in the results is that the terms of two former hawks on the Board, Kiuchi and Sato, recently expired, and one of their replacements, Kataoka, is more dovish that the Board majority. Instead of decisions passing by a 7-2 majority, with two dissents favoring less stimulus, they now are getting approved by an 8-1 majority, with the dissent wanting even more aggressive stimulus.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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